Stop confusing the profits of your business with your salary/wage. You get paid for what you do and a return on what you own. I dont care if you are a sole prop, S corp, LLC - if you are not figuring in a fair market wage for yourself, your net income number is off. Around 10 years ago I was talking with a friend/advisor about taking distributions (we are an S corp). I was taking an artificially low salary and using distributions(lower tax rate) to make up the difference in order to meet personal financial obligations. His point was that by accepting a below market wage, I was overstating the profits of the business. A demanding shareholder would never stand for it. He challenged me to value profitability over tax savings. I made the change and increased my salary to fair market. Now when i look at my books i see clean financials and a higher net - I have become a more demanding shareholder in my own company.