@webhostpro
I was hoping to get a definitive answer like 20% of profits or 10% of gross for example. Unfortunately, as with most things, it's not that black and white. The IRS requires shareholder-owners of s-corps to pay themselves a "reasonable" salary. There is no definition of what is considered reasonable. You pay income tax on both your salary and the net income of the business regardless of whether it is distributed to the shareholder-owners or left in the business as retained earnings.
The issue that the IRS is trying to avoid is S-corp shareholder-owners paying themselves too little in salary and taking more in distributions. This doesn't avoid income tax but it avoids self-employment taxes. Therefore, the IRS requires that you pay yourself a reasonable amount relative to other people doing the same job. I have seen a business where the shareholder-owner paid themselves $90K/year, but the net income for the business exceeded $1M. $90K was probably not unreasonable given the industry and the responsibilities of the owner. However, the only way to know what is reasonable is if the business gets audited. The IRS ultimately decides what is reasonable. If you disagree with what they decide is reasonable, you will have to take legal action.
You cannot take a draw as @Pete_Mc mentioned. If you're a shareholder-owner and are getting paid in return for your service to the corporation, you must pay yourself a salary (just like any other employee) and anything beyond that has to be a distribution, and distributions must be made in accordance with the percentage ownership of the shareholders. Draws are strictly for sole proprietorships and partnerships, not S-corps.
If the business is not doing well for example, can you skip a month or do you have to pay every month.
Certainly, you can skip paying yourself for a month or two if the business is unable to afford it.
