buksoS corporation reasonable salary shareholder wages
Not tax advice. General bookkeeping information only, checked against the official sources linked below (Canada Revenue Agency, IRS, provincial governments and Justice Laws) on Oct 17, 2026. Rules change; check with your accountant before you file.
United States
US: An S corporation must pay a shareholder who works in the business reasonable wages (on a W-2, with payroll taxes) before taking non-wage distributions. The IRS can treat distributions as wages if the salary is too low. There is no fixed formula: duties, time spent, training and what similar businesses pay are among the factors.
Official source: irs.gov