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Electing S-Corp taxation can save you thousands in self-employment tax — but only above a certain profit threshold. See the exact math for your situation.
Revenue minus business expenses — the amount flowing to your personal return today.
What you'd pay yourself as an employee. Target 40-60% of profit for most service businesses.
Payroll service + S-Corp tax return (Form 1120-S). Typical range $1,500-$2,500/year.
Net annual savings after S-Corp costs
$5,975
Electing S-Corp taxation saves roughly $5,975 per year at this profit level.
Current (SMLLC/Sole Prop)
$16,955
Self-employment tax on $110,820 SE-taxable earnings
With S-Corp Election
$10,980
$9,180 payroll + $1,800 compliance
Break-even profit level
~$20,434
Below this profit level, S-Corp compliance costs usually exceed the savings. Rule of thumb: consider S-Corp election once net profit is consistently above $60K-$80K.
Estimate only. Uses 2026 Social Security wage base ($168,600). Assumes no additional Medicare tax, no state-level S-Corp quirks (CA charges 1.5% S-Corp franchise tax; NYC has UBT). Your CPA can model exact savings for your state.
Quarterly Tax Estimator
See your exact quarterly federal + state payments.
Read the full tax guide
How SMLLC tax works, when to elect S-Corp, quarterly payments.
Start with a disregarded-entity LLC today. Elect S-Corp status later once you hit the break-even profit level.