Biz Help For You · 2026-08-01 · 9 min
Send us Fan Mail Many S corporation owners try to reduce payroll taxes by paying themselves a small salary and taking the rest as shareholder distributions. While this strategy may seem appealing, it can create significant IRS risks if your salary isn't considered reasonable compensation. In this video, we discuss: • What the IRS considers reasonable compensation for S corporation owners • Why paying yourself too little can trigger payroll tax audits and penalties • Common myths about S corporation salaries, including the 50/50 rule • How the IRS determines whether your compensation is reasonable • The different methods tax professionals use to calculate fair compensation • Practical payroll compliance tips to help protect your business If you're an S corporation owner, understanding reasonable compensation is essential to avoiding costly IRS penalties, interest, and payroll tax issues. This episode provides practical guidance to help you stay compliant while making informed payroll decisions. Pay yourself correctly. Stay compliant. Protect your business. ⏱️ Timestamps: 00:00 - Are you paying yourself enough?
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