An LLC vs S-Corp tax calculator helps business owners determine whether electing S-Corp tax status could save them money on self-employment taxes. As a sole proprietor or single-member LLC, all net profit is subject to the 15.3% self-employment tax. An S-Corp lets you split income between salary and distributions — only the salary portion is subject to payroll taxes, potentially saving thousands per year.
Enter Your Business Details
Your annual net business income after all expenses
W-2 wages or investment income for bracket placement
Default: 60% of profit. What you'd pay someone to do your job
Payroll processing: typically $500 - $2,000/year
Extra tax filing for S-Corp: typically $500 - $1,500/year
Side-by-Side Tax Comparison
| Item | LLC (Sole Prop) | S-Corp |
|---|---|---|
| Net Business Profit | — | — |
| Owner Salary | — | — |
| Distributions | — | — |
| SE / Payroll Tax | — | — |
| Federal Income Tax | — | — |
| Admin Costs (Payroll + Tax Prep) | — | — |
| Total Cost (Tax + Admin) | — | — |
| Net Savings with S-Corp | — |
Break-Even Analysis
S-Corp Savings by Income Level
Based on 60% salary ratio with $2,000 annual S-Corp admin costs
Important considerations:
- The IRS requires S-Corp owners to pay a reasonable salary — setting it too low invites audit scrutiny
- S-Corp election requires filing Form 2553 and maintaining corporate formalities
- Some states impose additional S-Corp taxes or fees (e.g., California $800 minimum franchise tax)
- This calculator uses federal rates only — consult a CPA for state-specific analysis
How to Use This LLC vs S-Corp Calculator
One of the biggest tax decisions for self-employed business owners is whether to remain a sole proprietor (or single-member LLC) or elect S-Corp tax status. The core difference comes down to self-employment tax: as a sole proprietor, all net profit is subject to the 15.3% SE tax, while an S-Corp only pays payroll taxes on the owner's salary — distributions are exempt. This LLC vs S-Corp calculator quantifies the potential savings so you can make an informed decision.
Step 1: Enter Your Net Business Profit
Start with your total annual revenue minus all business expenses. This is the net profit that would flow through to your personal tax return. The higher your profit, the more potential savings an S-Corp election offers, since a larger portion can be taken as distributions rather than salary.
Step 2: Set Your Reasonable Salary
If you elect S-Corp status, you must pay yourself a reasonable salary for the work you perform. The default is set to 60% of profit, which is a common starting point, but you should research what someone in your role and industry would earn. The IRS can reclassify distributions as wages if your salary is unreasonably low, resulting in back taxes and penalties.
Step 3: Include S-Corp Administrative Costs
S-Corps have costs that sole proprietors do not: payroll processing services (typically $500-$2,000/year), additional tax preparation for Form 1120-S ($500-$1,500/year), and potential state fees. These costs eat into your tax savings and are the main reason S-Corp does not always make sense for lower-income businesses.
Understanding the Break-Even Point
The break-even point is the income level where S-Corp tax savings exactly equal the additional administrative costs. Below this point, staying as a sole proprietor LLC is more cost-effective. Most tax professionals cite a range of $50,000 to $75,000 in net profit as the typical break-even zone, but your specific situation depends on your salary ratio and admin costs. The calculator finds your exact break-even based on your inputs.
Key Considerations Beyond Taxes
Tax savings are not the only factor. S-Corps require maintaining corporate formalities, separate bank accounts, reasonable documentation of salary decisions, and timely payroll tax deposits. You will also need to file an additional tax return (Form 1120-S) each year. For many business owners earning over $75,000-$100,000 in profit, the tax savings far outweigh these burdens. Consult a CPA or tax attorney before making the election to ensure it fits your specific circumstances.
For a detailed walkthrough, see our guide: LLC vs S-Corp Tax Comparison 2026.
FAQ
Is this LLC vs S-Corp calculator free?
Yes, this calculator is completely free with no signup or account required. Compare LLC and S-Corp tax liability as many times as you like. All calculations run locally in your browser — no financial data is sent to any server.
Is my financial data private?
Absolutely. All calculations happen entirely in your browser using JavaScript. No income figures, salary data, or personal information are ever transmitted or stored. You can use this tool completely offline once the page loads.
What is the difference between an LLC and an S-Corp?
An LLC (taxed as sole proprietorship) pays self-employment tax on all net profits — 15.3% on the first ~$168,600 and 2.9% above that. An S-Corp lets you pay yourself a reasonable salary (subject to payroll taxes) and take remaining profits as distributions, which are not subject to self-employment tax. The trade-off is higher administrative costs for S-Corps.
At what income level does an S-Corp save money?
Most tax professionals suggest an S-Corp election starts saving money when net business profits exceed $50,000 to $75,000 per year. Below that, the administrative costs of running an S-Corp (payroll processing, additional tax filings, state fees) can outweigh the self-employment tax savings. This calculator finds your exact break-even point.
What is a reasonable salary for S-Corp owners?
The IRS requires S-Corp owner-employees to pay themselves a reasonable salary before taking distributions. A reasonable salary is typically what you would pay someone to do the same work in your industry and geographic area. The IRS scrutinizes salaries that are too low relative to the business profits, and setting salary too low can trigger audits and penalties.
What are the additional costs of an S-Corp?
S-Corps incur costs that sole proprietor LLCs do not, including payroll processing ($500-$2,000/year), additional tax preparation for Form 1120-S ($500-$1,500/year), and some states charge extra fees — for example, California has an $800 minimum franchise tax for S-Corps. These costs reduce the net tax savings from the S-Corp election.
Can any LLC elect S-Corp status?
Most single-member and multi-member LLCs can elect S-Corp tax treatment by filing IRS Form 2553. Requirements include being a domestic corporation, having no more than 100 shareholders, having only one class of stock, and shareholders must be U.S. citizens or residents. The election must be filed within 75 days of the start of the tax year or anytime in the prior year.
Does this calculator account for state taxes?
This calculator focuses on federal self-employment and income tax differences between LLC and S-Corp structures. Some states have additional S-Corp taxes or fees (like California's $800 minimum franchise tax), which you can include in the S-Corp costs field. For a complete picture, consult a CPA familiar with your state's tax laws.