Free tool
S-Corp Savings Estimator
The S-Corp election can save thousands in self-employment tax once you cross the breakeven — and cost you money below it. See exactly where you land.
S-Corp Savings Estimator
Compare default LLC pass-through taxation against an S-Corporation election. The S-Corp split between salary (subject to FICA) and distributions (not subject to SE tax) can save thousands once net profit exceeds the breakeven.
Pass-through (Schedule C)
- SE tax$21,194
- Federal income tax$16,809
- State income tax$0
Total tax$38,003
S-Corp election
- FICA on salary$9,891
- Federal income tax$21,407
- State income tax$0
Total tax$31,298
Estimated annual savings
$6,706
Net profit $150,000 is above the breakeven ($80,616). An S-Corp election likely makes sense here — but factor in ~$1,500/yr payroll & extra return-prep costs.
Caveats and watch-outs
- "Reasonable salary" must be defensible — IRS audits S-Corps that pay artificially low salaries.
- An S-Corp election (Form 2553) must be filed within 2 months and 15 days of the tax year.
- S-Corp shareholders cannot be non-US residents.
- Payroll, unemployment insurance, and workers' comp add real annual costs (~$1,500-$3,000).
- State pass-through-entity (PTE) tax workarounds may further change the picture.