S-corp Tax Savings for Consultant in UT
How to set reasonable S-corp compensation for a Consultant in Utah. Planning framework, checklist, and official sources.
Updated: 2026-01-15
Running an S corporation can lower self-employment taxes by splitting pay into W-2 salary and distributions, but the IRS expects that salary to be reasonable for the work performed. This guide gives a practical, planning-first framework for a Consultant in Utah, plus the official sources your CPA will want to see.
Last reviewed: January 15, 2026.
Key takeaways
- The IRS expects shareholder-employees to take reasonable wages before distributions.
- Reasonable compensation is fact-specific: role, hours, revenue drivers, and comparable market pay matter.
State tax snapshot
- Utah requires S corporations to file a TC-20S return. (https://tax.utah.gov/business/corporate-income-tax/s-corp-tax/)
- Utah's flat income tax rate is 4.55%. (https://incometax.utah.gov/paying/tax-rates)
Role & revenue drivers
Consultants often blend billable delivery with sales, scoping, and account management. Compensation should reflect both client-facing execution and business development time.
State + profession context
Consultants split billable delivery with sales, scoping, and client management, which makes income lumpy across quarters. Your role often shifts between execution and relationship ownership depending on pipeline health. Utah’s flat income tax and fast-growing business environment reward clean documentation and consistent payroll practices. In smaller markets, owner-operators often absorb both delivery and ops, which should be reflected in compensation. Use the OEWS wage range as an anchor, then sanity-check it against local hiring realities and your exact responsibilities. The goal isn’t a perfect number; it’s a defensible narrative your CPA can validate with your file. Documenting time allocation and responsibilities is often the deciding factor in a defensible range.
Compensation benchmark (SOC)
- SOC code: 13-1111 (Management Analysts).
- BLS OEWS suppresses state-level wage estimates for Management Analysts in Utah; use national data as a fallback: U.S. annual median $101,190; 25th–75th percentile range $76,770–$133,140. (https://data.bls.gov/oes/)
Note: OEWS May 2024 was released on April 2, 2025 (latest available as of January 15, 2026). (https://www.bls.gov/oes/update.htm)
What "reasonable compensation" means
Reasonable compensation is the wage you would pay someone else to do your job under similar conditions. The IRS looks at duties, experience, time spent, and what comparable roles earn, not a fixed percentage of profit. Use multiple data points to defend a range, not a single number.
A clean framework
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Define the role. Capture what you actually do: client/patient load, revenue responsibility, admin oversight, and business development.
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Benchmark a range. Use BLS occupational wage data plus any industry surveys or local comps your CPA trusts. Focus on state-level data where possible.
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Model the split. Pay the reasonable wage as W-2 salary; treat the remaining profit as distributions only after the wage is defensible.
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Document the rationale. Keep your notes, sources, and calculations with the tax file so your CPA can defend the position.
Example scenario
Example: A Utah consultant who is 60% billable and 40% sales/strategy work should document hours and engagement mix to support a defensible salary range.
Decision checklist
- Did income or services change materially this year?
- Do you have a defensible compensation range for a Consultant in Utah?
- Is the documentation clear enough to share with your CPA?
- Have you documented how time is split across delivery, management, and growth?
Questions to ask your CPA
- What compensation range is defensible for my role and hours?
- How do Utah-specific entity taxes affect the split?
- What documentation would you want if the IRS asked for support?
FAQ
Do I need a separate state S election in Utah? Many states require additional registration or elections beyond the federal S election. Confirm the Utah requirements with your CPA and the state tax authority.
Should I use national or Utah wage data? State or local data is typically more defensible when available. Use BLS data and any reputable industry surveys your CPA prefers.
What documents should I keep? Time allocation notes, comparable wage sources, and written rationale for the salary range are the most common requests.
Related resources
- S-corp Reasonable Compensation Guide
- Year-End Tax Projection
- Estimated Tax Catch-Up
- Tax Optimization
Next step
Use the S-corp Reasonable Compensation Guide to draft your range, then bring it to your CPA for validation.
Compliance note
This guide is for planning and coordination only. It does not provide tax or legal advice. Confirm details with a qualified professional.
