If you're an S-corp owner working as a General and Operations Manager in New York, the IRS requires you to pay yourself a 'reasonable compensation' — a salary comparable to what you'd pay a third party for the same work. According to Bureau of Labor Statistics data, General and Operations Managers in New York earn a median of $130,860 per year, making that the anchor for your S-corp salary calculation.
| Percentile | Annual Wage |
|---|---|
| 25th percentile | $85,770 |
| Median (50th) | $130,860 |
| 75th percentile | $209,110 |
Data: Bureau of Labor Statistics, Occupational Employment and Wage Statistics, May 2025. SOC 11-1021 — General and Operations Managers in New York. Source: bls.gov/oes/
Reasonable compensation is the salary an S-corp must pay its owner-employees for services performed. The IRS defines it as the amount a third-party employer would pay for the same work. For General and Operations Managerss in New York, BLS OES data provides a defensible market benchmark. The IRS expects shareholders who perform services for the corporation to receive a salary comparable to what similar employees would earn.
The IRS evaluates multiple factors: prevailing wages for the same work in the same region (BLS data is widely accepted), the owner's training and experience, duties and responsibilities, time devoted to the business, and what comparable businesses pay for similar services. No single factor is determinative — documented evidence across multiple factors strengthens your position.
If the IRS determines that an S-corp owner took distributions that should have been wages, it can reclassify those distributions as W-2 wages and assess back payroll taxes plus interest and penalties. The IRS specifically targets situations where shareholder-employees take minimal or no salary while receiving large distributions — a pattern that avoids FICA taxes.
Document your reasoning before filing, not after. Useful evidence includes: (1) BLS OEWS wage data for your occupation and state (this page uses the latest published BLS OEWS release), (2) comparable job postings showing market rates for General and Operations Managerss in New York, (3) a written description of your duties and time allocation, (4) minutes of any board/shareholder resolutions setting salary. Consult a CPA to build a complete audit defense file.