Average S Corporation Salaries
S corporation owners and managers often ask about average S corporation salaries for shareholder-employees.
To help your S corporation with this process, I've created a table of "Average S corporation salaries" (see below) using the most recent statistics available from the Internal Revenue Service's website.
The most recent statistics come from 2013 1120S Subchapter S tax return data. But you should still be able to get insight into what works from this real, industry-by-industry salary data.
What you probably want to do, however, is inflate these 2013 amounts for inflation that's occurred since then. If you're looking to set salaries for an S corporation shareholder-employee for 2018, for example, you possibly want to inflate the values in the table below by two or three percent inflation for four years. (A two percent annual adjustment for four years works out to about an 8.2% bump. A three percent annual adjustment for four years works out to about a 12.5% bump.)
One final comment: If you do use the data from the table below, be sure to skim the cautions that appear beneath the table.
|Industry||Avg. Revenues||Avg. Salary||Avg. Profit|
|Forestry & logging||1,639,704||14,188||26,825|
|Agriculture support activities, fishing,
hunting & trapping
|Construction of buildings||1,972,188||27,904||39,053|
|Heavy & civil engineering
construction & land subdivision
|Specialty trade contractors||1,242,063||33,635||45,846|
|Beverage & tobacco product
|Textile mills & textile product
|Leather & allied product
|Wood product manufacturing||5,305,003||39,966||164,402|
|Printing & related support
|Petroleum & coal products
|Plastics & rubber products
|Nonmetallic mineral product
|Primary metal manufacturing||12,561,402||103,952||303,087|
|Fabricated metal product manufacturing||3,920,469||62,143||172,819|
|Computer & electronic product
equipment, appliance & component manufacturing
|Transportation equipment manufacturing||7,341,094||78,463||259,263|
|Furniture & related product
|Wholesale durable goods||3,970,853||48,016||97,071|
|Wholesale electronic markets, agents
|Motor vehicle dealers & parts
|Furniture & home furnishings stores||1,949,938||35,365||55,592|
|Electronics & appliance stores||1,864,705||23,183||24,188|
|Building material & garden equipment
& supplies dealers
|Food, beverage & liquor stores||2,341,639||16,273||30,107|
|Health & personal care stores||1,891,834||33,602||49,750|
|Clothing & clothing accessories
goods, hobby, book & music stores
|General merchandise stores||1,553,616||16,240||47,200|
|Miscellaneous store retailers||1,008,489||22,720||18,831|
|Air, rail & water transportation||2,392,988||26,953||70,038|
|Transit & ground passenger
|Other transportation & support
|Warehousing & storage||4,076,262||29,817||36,044|
|Publishing industries (except Internet)||1,459,214||49,124||72,956|
|Motion picture & sound recording
|Broadcasting (except Internet)||1,043,564||25,345||39,265|
|Telecommunications (including paging,
cellular, satellite, cable & Internet service providers)
|Data processing, hosting & related
|Other information services||1,146,278||43,970||56,603|
|Depository credit intermediation||4,721,248||22,477||126,397|
|Non-depository credit intermediation||910,426||30,581||84,518|
commodity contracts & other financial investments & related
|Insurance carriers & related
|Funds, trusts & other financial
|Rental & leasing services||1,100,534||20,571||52,879|
|Lessors of nonfinancial intangible
assets (except copyrighted works)
|Professional, scientific & technical
|Management of companies (holding companies)||310,121||11,193||74,826|
|Administrative & support services||1,116,288||27,874||46,289|
|Waste management & remediation
|Offices of health practitioners &
outpatient care centers
|Miscellaneous health care & social
|Hospitals, nursing & residential
|Other arts, entertainment &
|Amusement, gambling & recreation
|Food services & drinking places||1,001,557||16,800||25,831|
|Repair & maintenance||621,063||23,542||23,151|
|Personal & laundry services||373,929||16,412||15,412|
|Religious, grantmaking, civic,
professional & similar organizations
Some Cautions about the IRS Average S corporation Salary Data
Let me issue some cautions and caveats about the data from the IRS.
First, and really important, the averages all represent means and not medians.
For example, the first line in the table reports that the average revenues of an S corporation in 2013 was $1,584,133. That's probably way above the median, midpoint S corporation revenue. Further, the table calculates the average salary shown in the table by dividing the officer compensation by the number of shareholders. Again, that value is probably way above the median.
Note: Remember a median is the value that separates the top half from the bottom half. Using a median value as your S corporation salary would be a good approach. A median would mean half of your industry peers make more and half make less. Unfortunately, that data is not available.
Second, this approach includes officers who aren't shareholders and shareholders who don't work or don't work full time--so that the numbers are pretty approximate. You do therefore want to be careful. However, because most S corporations have one or possibly two shareholders, you should still find the values helpful.
Third, if you combine the data above (especially after adjusting for inflation) with occupational salary data supplied by the Bureau of Labor and Statistics, you should find yourself converging on some reasonable compensation value.
To give you an example of this, say the table above suggests that shareholder-employees in your industry, which happens to be construction, earn on average $30,000 a year in wages. (This comes from the seven row of the table and I inflated that $27,904 value by 8.2% to tweak the number for inflation.) If the Bureau of Labor Statistics says that on average someone doing the job the you do earns $40,000, you should be pretty reasonable if your salary falls between $30,000 and $40,000.
If you set your salary to $40,000, so you exceed the IRS average S corporation salaries values and match the Bureau of Labor statistics, your salary should logically be reasonable. Or close to reasonable.
Finally a tip: For more help setting a reasonable compensation amount, please consider our monograph (ebook), "Setting Salaries for S Corporation."
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