Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Net annual saving from S-corp election
$7,151
Self-employment tax as an LLC
$19,781
Payroll tax + compliance as S-corp
$12,630
Profit taken as distributions
$70,000
Annual compliance cost
$1,920
Profit where the election breaks even
$82,549
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How to use this
- 1Enter net business profit ($).
- 2Enter reasonable salary you'd pay yourself ($).
- 3Enter payroll service ($/year).
- 4Enter extra tax prep (1120-s) ($/year).
- 5Enter state entity / franchise tax ($/year).
- 6Enter social security wage base ($).
- 7Read your net annual saving from s-corp election on the right — it updates as you type.
- 8Hit Share to keep the scenario or send it to someone.
About this calculator
The S-corporation election saves money in exactly one way for most small businesses: profit distributed to the owner beyond a reasonable salary escapes the 15.3% self-employment tax that applies to all of a sole proprietor's or default-LLC's net earnings. Against that saving sit real costs — running payroll, filing a separate 1120-S return, state payroll registrations, and in some states an additional entity-level tax. This calculator computes self-employment tax under the default treatment, computes payroll taxes on the salary you set under the S-corp treatment, subtracts the compliance costs, and reports the net annual saving plus the profit level at which the election starts paying for itself. The salary you choose must be reasonable compensation for the work performed; setting it artificially low is the most commonly audited aspect of S-corp treatment, so model a defensible figure rather than the smallest number that maximises the output.
Worked example
Using the values the calculator loads with:
Inputs
- Net business profit: 140000 $
- Reasonable salary you'd pay yourself: 70000 $
- Payroll service: 720 $/year
- Extra tax prep (1120-S): 1200 $/year
- State entity / franchise tax: 0 $/year
- Social Security wage base: 176100 $
Results
- Net annual saving from S-corp election: $7,151
- Self-employment tax as an LLC: $19,781
- Payroll tax + compliance as S-corp: $12,630
- Profit taken as distributions: $70,000
- Annual compliance cost: $1,920
- Profit where the election breaks even: $82,549
What each field means
Inputs
- Net business profit ($)
- The net business profit used in the calculation, measured in $. Starts at 140000 $ so you have a working example on load. Accepted range: 10000–2000000 $.
- Reasonable salary you'd pay yourself ($)
- The reasonable salary you'd pay yourself used in the calculation, measured in $. Starts at 70000 $ so you have a working example on load. Accepted range: 0–1000000 $.
- Payroll service ($/year)
- The payroll service used in the calculation, measured in $/year. Starts at 720 $/year so you have a working example on load. Accepted range: 0–5000 $/year.
- Extra tax prep (1120-S) ($/year)
- The extra tax prep (1120-s) used in the calculation, measured in $/year. Starts at 1200 $/year so you have a working example on load. Accepted range: 0–8000 $/year.
- State entity / franchise tax ($/year)
- The state entity / franchise tax used in the calculation, measured in $/year. Starts at 0 $/year so you have a working example on load. Accepted range: 0–5000 $/year.
- Social Security wage base ($)
- The social security wage base used in the calculation, measured in $. Starts at 176100 $ so you have a working example on load. Accepted range: 100000–300000 $.
Results
- Net annual saving from S-corp election
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Self-employment tax as an LLC
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Payroll tax + compliance as S-corp
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Profit taken as distributions
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Annual compliance cost
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Profit where the election breaks even
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
What counts as a reasonable salary?
What you would have to pay someone else to do your job, supported by industry survey data, hours worked, and the role's responsibilities. The IRS challenges low salaries paired with large distributions, so document how you arrived at the figure.
Does an S-corp reduce income tax?
No. Profit still flows to your personal return either way. The election only changes how much of that profit is exposed to Social Security and Medicare tax.
Does a lower salary reduce my Social Security benefit?
Yes, eventually. Benefits are computed from your earnings record, so years of a minimal salary shrink your future benefit. That trade-off is not captured in the dollar saving above.
Are there states where this backfires?
Some states impose an entity-level tax or franchise fee on S-corps, and a few do not recognise the federal election. Enter that cost in the state entity tax field before deciding.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
Related tools
Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). S-Corp vs LLC Tax Savings Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/s-corp-vs-llc-tax-savings-calculator
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/s-corp-vs-llc-tax-savings-calculator" target="_blank" rel="noopener">S-Corp vs LLC Tax Savings Calculator — RevenueLab</a> (2026).</p>
Source: [S-Corp vs LLC Tax Savings Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/s-corp-vs-llc-tax-savings-calculator) (2026).