Pay Yourself, But Not Like a Game Show Host 

Electing S-corp status for your LLC can be a tax-saving move. But with great savings comes great responsibility—mainly paying yourself a “reasonable salary.” That’s IRS-speak for: Don’t try to get cute.

So, what’s a “reasonable” salary?

• It depends on your role and industry

• Use market research, job listings, and salary benchmarks

• You can’t pay yourself $10k/year and take $150k in distributions—unless you want an audit

Why it matters:

• The IRS expects payroll taxes on wages, not distributions

• Underpaying yourself = tax evasion territory

• Overpaying = unnecessary payroll tax

How to do it right:

• Set up payroll (Gusto, ADP, QuickBooks)

• Pay yourself consistently, not randomly

• File payroll tax forms (W-2, 940, 941)

Want to sleep well? Treat your business like you work for it—even if the boss is also you.

✅ Funny Tip: Your salary shouldn’t look like Monopoly money, unless your business is Monopoly.