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 |
---|---|---|---|
All industries | 1,584,133 | 35,900 | 53,846 |
Agriculture production | 1,177,482 | 7,326 | 23,163 |
Forestry & logging | 1,639,704 | 14,188 | 26,825 |
Agriculture support activities, fishing, hunting & trapping |
1,317,256 | 10,581 | 40,846 |
Mining | 2,238,426 | 22,797 | 145,044 |
Utilities | 2,264,233 | 22,837 | 42,927 |
Construction of buildings | 1,972,188 | 27,904 | 39,053 |
Heavy & civil engineering construction & land subdivision |
3,777,082 | 32,915 | 73,790 |
Specialty trade contractors | 1,242,063 | 33,635 | 45,846 |
Food manufacturing | 14,114,124 | 55,169 | 197,344 |
Beverage & tobacco product manufacturing |
5,422,443 | 31,446 | 155,438 |
Textile mills & textile product mills |
3,902,216 | 79,249 | 136,211 |
Apparel manufacturing | 4,895,647 | 81,034 | 161,090 |
Leather & allied product manufacturing |
5,186,625 | 70,470 | 133,823 |
Wood product manufacturing | 5,305,003 | 39,966 | 164,402 |
Paper manufacturing | 11,463,969 | 81,592 | 261,985 |
Printing & related support activities |
2,105,232 | 39,968 | 66,884 |
Petroleum & coal products manufacturing |
12,928,872 | 62,898 | 205,304 |
Chemical manufacturing | 10,206,698 | 120,682 | 352,353 |
Plastics & rubber products manufacturing |
7,936,173 | 67,879 | 246,833 |
Nonmetallic mineral product manufacturing |
4,281,548 | 55,773 | 124,343 |
Primary metal manufacturing | 12,561,402 | 103,952 | 303,087 |
Fabricated metal product manufacturing | 3,920,469 | 62,143 | 172,819 |
Machinery manufacturing | 4,944,810 | 61,387 | 210,724 |
Computer & electronic product manufacturing |
5,850,543 | 99,643 | 218,004 |
Electrical equipment, appliance & component manufacturing |
6,944,198 | 79,681 | 275,245 |
Transportation equipment manufacturing | 7,341,094 | 78,463 | 259,263 |
Furniture & related product manufacturing |
2,608,803 | 32,433 | 87,327 |
Miscellaneous manufacturing | 2,631,406 | 44,664 | 121,812 |
Wholesale durable goods | 3,970,853 | 48,016 | 97,071 |
Wholesale nondurable | 10,110,369 | 53,926 | 123,700 |
Wholesale electronic markets, agents & brokers |
249,114 | 42,018 | 48,140 |
Motor vehicle dealers & parts dealers |
9,858,497 | 48,011 | 105,291 |
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 |
3,432,962 | 38,156 | 88,225 |
Food, beverage & liquor stores | 2,341,639 | 16,273 | 30,107 |
Health & personal care stores | 1,891,834 | 33,602 | 49,750 |
Gasoline stations | 6,428,653 | 16,445 | 33,559 |
Clothing & clothing accessories stores |
897,048 | 21,500 | 27,525 |
Sporting goods, hobby, book & music stores |
1,720,615 | 18,150 | 54,117 |
General merchandise stores | 1,553,616 | 16,240 | 47,200 |
Miscellaneous store retailers | 1,008,489 | 22,720 | 18,831 |
Nonstore retailers | 1,292,066 | 39,374 | 47,300 |
Air, rail & water transportation | 2,392,988 | 26,953 | 70,038 |
Truck transportation | 1,520,815 | 49,026 | 35,343 |
Transit & ground passenger transportation |
615,759 | 14,512 | 22,656 |
Pipeline transportation | 4,147,016 | 13,447 | 70,225 |
Other transportation & support activities |
1,727,547 | 36,194 | 55,979 |
Warehousing & storage | 4,076,262 | 29,817 | 36,044 |
Publishing industries (except Internet) | 1,459,214 | 49,124 | 72,956 |
Motion picture & sound recording industries |
524,691 | 57,227 | 34,375 |
Broadcasting (except Internet) | 1,043,564 | 25,345 | 39,265 |
Telecommunications (including paging, cellular, satellite, cable & Internet service providers) |
2,185,148 | 37,777 | 77,091 |
Data processing, hosting & related services |
652,964 | 30,416 | 69,024 |
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 |
Securities, commodity contracts & other financial investments & related activities |
1,063,429 | 74,351 | 102,790 |
Insurance carriers & related activities |
501,912 | 48,701 | 62,072 |
Funds, trusts & other financial vehicles |
389,405 | 4,271 | 17,560 |
Real estate | 175,719 | 8,772 | 11,112 |
Rental & leasing services | 1,100,534 | 20,571 | 52,879 |
Lessors of nonfinancial intangible assets (except copyrighted works) |
721,556 | 14,342 | 119,769 |
Professional, scientific & technical services |
716,139 | 48,230 | 52,314 |
Management of companies (holding companies) | 310,121 | 11,193 | 74,826 |
Administrative & support services | 1,116,288 | 27,874 | 46,289 |
Waste management & remediation services |
2,343,514 | 29,823 | 46,178 |
Educational services | 634,394 | 27,307 | 32,299 |
Offices of health practitioners & outpatient care centers |
784,301 | 104,897 | 80,853 |
Miscellaneous health care & social assistance |
828,922 | 30,447 | 37,389 |
Hospitals, nursing & residential care facilities |
2,994,524 | 33,951 | 61,076 |
Other arts, entertainment & recreation |
621,610 | 90,706 | 39,114 |
Amusement, gambling & recreation industries |
816,902 | 16,193 | 15,647 |
Accommodation | 787,013 | 5,393 | 15,959 |
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 |
206,530 | 14,708 | 40,628 |
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."
Additional Information You May Find Useful
If you want additional information about how to maximize the tax savings related to running a business or investment venture, you may also be interested in one of our downloadable e-books (see descriptions below). Each book covers a category of tax planning topics that easily save a business owner significant amounts of income or self-employment taxes (potentially thousands of dollars a year) and is instantly downloadable.
Often the best tax saving tool private companies have? The Section 199A deduction which allows them to avoid taxes on the last 20 percent of their income.
Read MoreUsing an S corporation for your business? To maximize savings, you need to minimize the salary paid to shareholders. But this decision is tricky.
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