06/05/2026
S Corp owners. If you pay yourself a salary too low, the IRS can reclassify your distributions as wages and add penalties.
The standard is "reasonable compensation" for the work you actually do, based on your role, your industry, and your geography.
Most owners get this wrong by under paying. A few get it wrong by guessing.
If your owner salary has not been benchmarked recently, the time to benchmark is before year end.
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