How much should you take out?
It depends entirely on how the business is taxed — a sole proprietor has no salary to set, an S corporation must pay reasonable compensation first. We ask that before anything else, and we work from what you need to live rather than a rule of thumb.
Free, and no card. Under three minutes. “I don't know” about your entity is a real answer — and an important one.
Informational only — NOT TAX ADVICE, and no reasonable-compensation determination is made or implied. Owner compensation is fact-specific and depends on your entity, your state and your circumstances. Confirm with a CPA or tax adviser before acting.
Owner pay is four different questions wearing one name
Ask how much an owner should pay themselves and you will get an answer built on a percentage of revenue, or a rule of thumb about profit, or a comparison to what employees earn. All of those skip the question that actually determines the answer: how the business is taxed. A sole proprietor does not have a salary to set — the profit is taxed to them whether they draw it or leave it in, and what they take are draws, not wages. An S corporation is at the opposite end: paying reasonable compensation for services is a requirement, not a preference, and distributions must be treated as wages to the extent they represent compensation for services rendered. Those two businesses cannot use the same reasoning, and a partnership and a C corporation each add a third and fourth.
So the entity question comes first here, and not knowing the answer is treated as a real answer rather than something to guess past. When it is unknown this tool returns no figures at all and points at the filed return instead, because the most expensive mistakes in owner compensation come from applying one regime's logic inside another.
What it will not do is tell an S corporation owner what their reasonable compensation is. The IRS lists nine factors — training and experience, duties, time and effort, dividend history, what comparable businesses pay, and others — and publishes no weighting between them. There is no arithmetic that turns that into a number, so this tool reports the factors, shows the gap between what is taken as wages and what the role pays elsewhere, and stops. That gap is a fact about your numbers. What to do about it is a judgment, and it belongs to you and your accountant.
Frequently asked questions
Why does the first question ask how the business is taxed?
Because it decides whether there is a decision at all. A sole proprietor has no salary to set — draws are not wages. An S corporation must pay reasonable compensation before anything else. A partnership answers it through the partnership agreement. A C corporation trades a deductible salary against non-deductible dividends. A figure produced without knowing which applies is not roughly right; it answers a different question.
What if I do not know how my business is taxed?
Say so, and the tool returns no number at all. It tells you where to look instead: a Schedule C means sole proprietor, Form 1065 a partnership, Form 1120-S an S corporation, Form 1120 a C corporation. An LLC is not a tax classification on its own — it is taxed as one of those.
Will it tell me my reasonable compensation as an S corp owner?
No, and no tool should. The IRS publishes nine factors and no weighting between them, so there is no arithmetic that produces the answer. What this shows is the rule in the IRS's own words, the nine factors, and the gap between what you take as wages and what you told us the role pays elsewhere. The conclusion is yours and your CPA's.
Why does it ask what I need to live before what the job pays?
Because the personal floor is not negotiable and a technically correct number you cannot live on gets ignored, rightly. The market rate matters, but it is the second question, not the first.
Does it calculate self-employment tax?
No. It states the published rate and its components, but net earnings from self-employment are a defined fraction of net profit computed on Schedule SE, and that fraction has not been verified here from the issuing source. Rather than guess at the base, the tool says what it does not compute.