> if you're operating as a consultant, charging clients one rate, and then only claiming 40% of that is your "reasonable salary" Why would that be off? 40% sou

> if you're operating as a consultant, charging clients one rate, and then only claiming 40% of that is your "reasonable salary" Why would that be off? 40% sounds exactly right; large consultancies pay their consultants 40% (or less!) of what they’re charging clients for said consultants’ time. Maybe what you’re more concerned about here would be giving giving a 40%-of-revenue salary plus a 60%-of-revenue dividend. But the dividend wouldn’t be 60%. You, as the S-Corp, would be paying into all the regular withholding stuff companies have to pay into on behalf of their employees (social security, etc.). Ever heard the phrase “employing someone at a given salary, costs ≥200% of that salary”? It’s not far off.