LLC vs S-Corp Tax Calculator

Calculate the potential self-employment tax savings of electing S-Corp status for your LLC. S-Corps allow you to split income between salary and distributions.

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Income after expenses (before owner pay)
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Must be reasonable for your role

How It Works

LLC (Sole Proprietorship)

You pay self-employment tax (15.3%) on 100% of your net profit.

S-Corp

You pay self-employment tax (FICA) only on your salary. The remaining profit is taken as a "distribution," which is not subject to self-employment tax.

Example: $100k profit. $60k salary. You save 15.3% tax on the $40k distribution (~$6,000 savings).

Important Considerations

  • Reasonable Salary: The IRS requires you to pay yourself a "reasonable salary" for the work you do. Setting it too low to save taxes is a red flag.
  • Payroll Costs: S-Corps must run payroll, which costs money (service fees, unemployment insurance). Ensure savings outweigh these costs.
  • QBI Deduction: S-Corp election affects your Qualified Business Income deduction calculation.
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