Owner Compensation Tool

How you pay yourself as a business owner shapes your payroll taxes, your retirement contribution capacity, and your exposure to IRS scrutiny. This tool illustrates the tradeoffs across salary, distributions, and retirement funding so you can have a sharper conversation about your compensation strategy.

Salary, distributions, and what you're leaving on the table.

Enter your business's numbers to see how your pay mix affects payroll taxes and how much retirement savings capacity each structure unlocks. This tool illustrates general tradeoffs based on the figures you provide — it does not set a personal reasonable-compensation figure, which depends on facts specific to you. Please speak with a licensed advisor and tax professional before changing how you pay yourself.

⚖️ Salary vs. distribution tradeoffs 🧾 Illustrative payroll-tax impact 📈 Retirement capacity by plan
Your Business
S-corp owners split pay between W-2 salary and distributions. Sole props and most LLC owners pay self-employment tax on net earnings.
$
Profit before owner compensation, after other business expenses.
Your Pay Mix
$
The remainder is taken as distributions (not subject to payroll tax for S-corps).
Retirement & Planning
yrs
Owner Pay Available
—
Profit for compensation
Est. Payroll / SE Tax
—
Illustrative, current year
Salary Share
—
Of total owner pay
Est. Max Retirement Capacity
—
Illustrative, this structure
What Your Pay Mix Drives
How this structure affects taxes and savings capacity.

⚠️ About "Reasonable Compensation"

The IRS requires S-corporation owner-employees to pay themselves reasonable compensation for services performed before taking distributions. There is no single formula — it depends on your role, hours, industry, experience, and what comparable positions pay. A salary set too low to reduce payroll tax is a recognized IRS audit trigger. This tool does not calculate your reasonable compensation figure; determining it requires a facts-and-circumstances analysis with your advisor and tax professional.

Illustrative Retirement Contribution Capacity

Approximate maximum you could contribute under each plan type given your inputs. Actual limits depend on plan rules, compensation definitions, and IRS annual limits. Figures are illustrative only.
Solo 401(k)
—
Employee deferral + employer contribution.
SEP-IRA
—
Employer contribution up to 25% of eligible comp.
Defined Benefit Plan
—
Potentially the largest for high, stable earners.

Where Your Owner Pay Goes

Illustrative split of total owner compensation across payroll/SE tax, salary take-home, and distributions, based on your inputs. Excludes income tax and other factors.
Est. payroll / SE tax Salary (pre-income-tax) Distributions

Is your compensation strategy actually working for you?

The right salary-and-distribution mix — and the retirement structure layered on top of it — depends on facts specific to your business. A BlueLine Advisors consultation can help you evaluate your options and coordinate with your tax professional.

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Important Disclosures

This tool is provided by BlueLine Advisors LLC ("BlueLine") for illustrative and educational purposes only and does not constitute investment, tax, or legal advice. Results are estimates based on the inputs you provide and the assumptions listed below. They are not personalized recommendations and should not be the sole basis for any financial, compensation, or tax decision. In particular, this tool does not determine "reasonable compensation" for any owner, which requires an individualized facts-and-circumstances analysis.

Key assumptions embedded in this tool include: simplified 2026-style Social Security and Medicare (FICA) and self-employment tax rates applied to salary or net self-employment earnings up to and above the applicable Social Security wage base; illustrative retirement contribution capacity estimated using simplified Solo 401(k), SEP-IRA, and defined benefit plan parameters and standard catch-up eligibility at age 50 and older; and no accounting for federal or state income tax, the qualified business income deduction, the additional Medicare tax, net investment income tax, plan administration costs, existing employees, or entity-specific rules. Defined benefit contribution figures are highly sensitive to age, income stability, and actuarial assumptions and are shown only to indicate relative magnitude. Actual contribution limits are set annually by the IRS and by individual plan documents.

All information reflects the views of BlueLine as of the publication date and is subject to change without notice. Forward-looking statements, projections, and illustrative examples are not guarantees of future results and are based on assumptions that may not be realized. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal. Asset values fluctuate, and investors may receive back less than the amount invested.

BlueLine Advisors LLC is a registered investment adviser with the U.S. Securities and Exchange Commission. Registration with the SEC does not imply a certain level of skill or training. Consult a qualified financial professional and tax advisor before making any compensation, retirement, or financial decisions. For additional information about BlueLine Advisors LLC, including our Form ADV Part 2A, please visit www.blueline-advisors.com/disclosures.