S-Corp Election Savings Calculator

Estimate whether electing S-corp tax status would save you money versus staying a sole proprietor or single-member LLC.

Methodology & important caveat

"Reasonable salary" is an IRS facts-and-circumstances standard, not a formula — this tool does not tell you what your reasonable salary should be, only the tax effect of a salary figure you choose. This is not personalized business or legal advice; consult a CPA before electing S-corp status.

Worked example

A single-member LLC with $150,000 in net profit, paying a $70,000 reasonable salary, saves roughly $9,000/year by electing S-corp status — the $21,200 sole-proprietor self-employment tax drops to about $12,100 in combined S-corp payroll tax and administrative overhead. At $50,000 profit with a $45,000 salary, there's too little distribution left over for the election to pay for itself.

Limitations

• This tool doesn't determine what your reasonable salary should be — that's a facts-and-circumstances judgment call the IRS makes case by case, and getting it wrong (paying yourself too little) is the most common way S-corp elections get challenged in an audit.
• State-level S-corp fees and franchise taxes (e.g., California's minimum franchise tax) aren't included.
• Ignores one-time setup costs (state S-corp election filing, potential LLC-to-corp conversion costs) — only ongoing annual costs are modeled.