S-Corp Reasonable Compensation Reports — Stop guessing what reasonable looks like.
WageProof is reasonable compensation software for CPAs, EAs and tax advisors. In about 15 minutes it builds an audit-ready reasonable compensation report for an S-corp client, using Bureau of Labor Statistics wage data and the IRS’s three approaches, with the firm’s branding on Professional and Firm plans. A single report is $199; annual plans start at $499 for 10 reports. Owners can run their own, too.
What is reasonable compensation?
An S corporation can pay a working owner two ways: a salary, which carries payroll taxes, and distributions of profit, which don’t. Reasonable compensation is the salary the IRS requires that owner to be paid before taking distributions, meaning roughly what the business would pay someone else to do the same work in the same area. IRS Fact Sheet FS-2008-25 lists nine factors the courts have considered in judging it. WageProof prices the owner’s work against Bureau of Labor Statistics wage data for 750+ occupations and 6,000+ job titles across 500+ U.S. metro and nonmetro areas, and every wage figure traces to a published source.
Use our reasonable compensation calculator to estimate a salary range, or read the full reasonable compensation guide for a deeper look at how the IRS evaluates S-corp owner salaries.
Cost Approach
Build-up from BLS wages, one occupation per task. Every duty is priced separately, then weighted by time spent.
Market Approach
The BLS wage for the one occupation that best matches the owner’s role, at their experience level, in their local wage area.
Income Approach
Independent Investor Test: compensation derived from company financials and a target investor return. Available to tax-professional accounts on every plan.
Who is WageProof for?
Built for the CPAs, EAs, and tax advisors who run reasonable-comp reports for their S-corp clients — and simple enough for owners setting their own salary. Either way, about 15 minutes.
I’m a CPA, EA, or tax advisor
Generate client-ready reasonable compensation reports in minutes, white-labeled on the Professional and Firm plans. Send your client a questionnaire for a Cost or Market report, or fill it out yourself. All three IRS-recognized approaches are available, documented and ready if the IRS comes asking.
A single report is $199. Tax professionals can also choose an annual plan: Starter $499/year for 10 reports, Professional $999/year for 30, or Firm $1,499/year for 60 ($24.98/report on the Firm plan at 60 reports).
Run a client reportI’m an S-Corp Owner
Setting your own salary? Find out what the market pays for the work you actually do, and get a defensible number from federal wage data.
Start your reportHow does WageProof work?
Three steps. About 15 minutes.
- Step 1
Capture the role
Send your client a short questionnaire, or fill it out yourself — which tasks they perform, from bookkeeping to sales to managing employees, and their proficiency at each.
- Step 2
We price each task
Each task is matched to BLS wage data for the right local wage area (metro or nonmetro) and experience level. The math is documented and every hourly rate traces to a published source.
- Step 3
Download the report
Get a PDF with methodology documentation, source citations, and a board resolution template, ready for the tax return or an IRS audit. Professional and Firm plans add your firm’s branding.
Built to be your firm’s work product
Reasonable-comp documentation is advisory work you can systematize, brand, and bill for. WageProof gives every S-corp client a defensible number — with your firm’s name on the report, not ours.
One consistent methodology across your whole book, so the answer doesn’t change depending on who ran it. White-label branding is included on the Professional and Firm plans — with no enterprise contract to get there. Seats are included on the Professional (up to 10) and Firm (unlimited) plans, never a paid add-on. See pricing
BLS data, not a black box
We use Bureau of Labor Statistics wage data, which is free and public, and IRS experts have used it in Tax Court cases. Every hourly rate traces to a published source, with no proprietary wage database to defend.
White-labeled to your firm
Upload your logo and colors once. Every report puts your firm’s name and look in front of the client. Included on the Professional and Firm plans.
Protects your client — and you
When the IRS questions a client’s salary, a documented report helps protect the client from reclassification — and the preparer from §6694 penalty exposure.
Audit support
If the IRS asks about your report, we’ll support you.
What’s in a WageProof report?
A simplified example of the task-by-task breakdown. Each report reflects the client’s actual role, location, and experience.
Each task is priced using BLS wage data for the client’s local wage area (metro or nonmetro) and experience level.
Based on 5 tasks, 2,080 hours, Columbus, OH MSA
Common questions
The three calculation approaches are the ones described in the Reasonable Compensation Job Aid for IRS Valuation Professionals, a 2014 reference guide written by IRS valuation professionals (it says it is not an official IRS position). The wage data comes from the Bureau of Labor Statistics. It is free and public, and IRS experts have used it in Tax Court cases. Every wage figure cites the BLS occupation code, geographic area, and data year, so an examiner or your accountant can check each one against BLS. The full methodology is published on this site for anyone to review. We always recommend reviewing the report with your CPA, EA, or tax advisor.
Yes. There's a full sample report on the site, no email required. Cost and Market reports of your own have the same format, data sources and methodology documentation.
See the sample report →It's the salary an S-corp must pay its owner-employees for the work they perform. The IRS requires it to be comparable to what someone in a similar role would earn in the open market. Getting it wrong can trigger penalties, back taxes, and interest.
All wage data comes from the Bureau of Labor Statistics Occupational Employment and Wage Statistics program. Where BLS's own assignment for the survey year can be confirmed, we use the wage data BLS publishes for your county's own wage area — a metropolitan area or a named nonmetropolitan area — wherever it covers the occupation. When it doesn't (some occupations are too thinly staffed in an area to be published), the report falls back to a broader or older BLS figure and states on the page which substitution it made and why. No proprietary databases, no undisclosed adjustments.
Read the full methodology →About 15 minutes. You walk through a short questionnaire describing the owner's role and how they spend their time. The report generates immediately after. Download the PDF whenever you need it. Finalized reports do not expire while your account is active. Drafts auto-finalize 30 days after the figure is ready, so you always have a report.
Generate your first client report
Backed by BLS data, in about 15 minutes, with your firm’s branding on Professional and Firm plans.
Start your report