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What counts as a reasonable salary in an S corp?

6 min readPublished Apr 17, 2026
Northvale team at work

Pay yourself too little and you invite an audit; pay too much and you lose the S corp advantage. Finding the middle.

Start with the market rate

A reasonable salary is roughly what you would pay someone else to do your job. Industry salary surveys are a good starting point.

Document the decision

Keep a short memo with the data you used. It turns a judgment call into a defensible position.

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