S Corp Reasonable Compensation Calculator
Land on a defensible shareholder-employee salary, then see if S Corp is worth it
Three IRS-aligned methods for reasonable compensation, reconciled into one number and a range, plus a side-by-side sole proprietor vs. S Corp tax comparison for tax year 2026.
1) Role and location
Describe what the owner actually does, for example: 'dental practice owner, mostly clinical work' or 'solo attorney, estate planning.'
We support live lookups for major metros. If yours isn't recognized, we'll use statewide figures.
2) Time and profitability
Business net profit before any officer/shareholder salary.
Used for the Income (Independent Investor) Approach.
3) Experience and role mix
Versus revenue generated by staff or systems. Drives the Cost Approach's task-category split.
4) Tax profile
Specified Service Trade or Business (SSTB)?
Law, accounting, health, consulting, financial services, and similar fields are typically SSTBs for QBI purposes.
Reasonable rate of return on invested capital for the Income Approach (10 to 15% typical).
Payroll processing, Form 1120S prep, reasonable comp documentation, state fees.