Reasonable Salary
“I received a letter from the IRS questioning the low ratio of my S-Corp distributions to my salary, what documents prove my pay was reasonable?”
An IRS letter about an S-Corp’s salary and distribution mix often turns on whether the compensation was supported by the business facts, not just the payroll number itself. Documents that commonly matter include payroll records, job descriptions, time logs, officer duties, comparable pay data, and financial statements showing how the company operated and what the owner actually did. The answer can also depend on the owner’s role, the company’s profitability, and whether distributions followed a pattern that fits the business’s cash flow. Clear records that connect pay decisions to those factors often carry the most weight. Going through your records with a CPA usually surfaces the answer in under an hour.
In your 60-minute session, the KGOB advisor handling it will:
- Read your exact situation and tell you, in plain English, what’s actually going on.
- Lay out your options and the trade-offs — no jargon, no judgment.
- Give you a clear next step you can act on, whether that’s with us or on your own.
“How do I know if my S-corp salary is reasonable enough?”
“What is a reasonable salary for me as an S-corp owner?”
“I'm trying to figure out a reasonable salary for my S-corp, how do I tell?”
“As an S-corp owner, how do I figure out a reasonable W-2 salary that the IRS will not challenge during an audit?”
This page is a prompt to start a conversation, not tax or legal advice, and states no tax-law specifics as fact. A consult session does not by itself create an ongoing engagement. We do not promise specific outcomes or savings. Kohari Gonzalez Oneyear & Brown PLLC — Charlotte, NC.
Back to the full library