S Corporation Tax Calculator
Estimate tax savings, optimize owner compensation, and compare business entity structures
Business Information
Owner Compensation
As a sole proprietor or LLC, all business income passes through to your personal tax return and is subject to self-employment tax.
Tax Information
Tax Analysis Results
S Corporation Tax Analysis
S Corporation Tax Breakdown
| Category | Amount | Description |
|---|---|---|
| Business Net Income | $120,000 | Total business income minus expenses |
| Owner's Salary | $80,000 | Reasonable compensation to owner |
| Owner's Distributions | $40,000 | Profit distributions not subject to payroll tax |
| Federal Income Tax | $19,200 | Federal income tax on salary and distributions |
| State Income Tax | $6,000 | State income tax on salary and distributions |
| Employee FICA Tax | $6,120 | Employee portion of FICA taxes on salary |
| Employer FICA Tax | $6,120 | Employer portion of FICA taxes on salary |
| S Corp Annual Fees | $800 | Annual state filing fees for S Corporation |
| Additional S Corp Expenses | $2,000 | Accounting, payroll, and administrative costs |
| Total Tax and Expenses | $40,240 | Total tax burden and S Corp expenses |
S Corporation Tax Savings
Key Benefits: S Corporation status can save self-employment taxes on profits distributed as dividends, but requires reasonable salary to owners and additional compliance costs.
S Corporation Compensation Optimization
Recommendations for Your Business
Sole Proprietorship Tax Analysis
Sole Proprietorship Tax Breakdown
| Category | Amount | Description |
|---|---|---|
| Business Net Income | $120,000 | Total business income minus expenses |
| Federal Income Tax | $19,200 | Federal income tax on business income |
| State Income Tax | $6,000 | State income tax on business income |
| Self-Employment Tax | $16,973 | Self-employment tax (15.3% with deduction) |
| SE Tax Deduction | -$1,483 | Deduction for one-half of self-employment tax |
| Total Tax Burden | $40,690 | Total tax burden for sole proprietorship |
LLC Tax Analysis
LLC Tax Breakdown
| Category | Amount | Description |
|---|---|---|
| Business Net Income | $120,000 | Total business income minus expenses |
| Federal Income Tax | $19,200 | Federal income tax on business income |
| State Income Tax | $6,000 | State income tax on business income |
| Self-Employment Tax | $11,854 | Self-employment tax (partially reduced) |
| SE Tax Deduction | -$1,034 | Deduction for one-half of self-employment tax |
| LLC Annual Fee | $550 | Annual state filing fees for LLC |
| Total Tax Burden | $36,570 | Total tax burden for LLC |
Entity Type Comparison
Entity Comparison Summary
| Category | S Corporation | Sole Proprietorship | LLC |
|---|---|---|---|
| Total Tax Burden | $32,450 | $40,690 | $36,570 |
| Annual Savings | Best Option | -$8,240 | -$4,120 |
| Take-Home Income | $87,550 | $79,310 | $83,430 |
| Effective Tax Rate | 27.1% | 33.9% | 30.5% |
| 5-Year Tax Burden | $162,250 | $203,450 | $182,850 |
Other Considerations Beyond Tax Savings
- Compliance Requirements: S Corps have higher compliance requirements including payroll, board meetings, and separate tax returns.
- Audit Risk: S Corps with unusually low salaries relative to distributions may face higher IRS scrutiny.
- Fringe Benefits: Different treatment of health insurance and fringe benefits between entity types.
- Future Growth: Consider your long-term business plans when selecting an entity structure.
Scenario Comparison
No saved scenarios yet. Calculate and save a scenario to begin comparing.
Detailed Scenario Comparison
| Scenario | Business Income | Owner's Salary | Distributions | Total Tax | Take-Home | Tax Rate |
|---|
This calculator provides estimates only and is not a substitute for professional tax advice. Tax rates and regulations are subject to change. Please consult with a qualified tax professional for advice specific to your situation.
S Corporation Tax Calculator Help
How to Use This Calculator
This calculator helps you analyze tax differences between business entity types and optimize your S Corporation compensation structure:
- Enter your business income and expenses
- Select your entity type (S Corp, Sole Proprietorship, or LLC)
- For S Corps, set your salary and distribution amounts
- Enter your tax rates and other relevant information
- Click "Calculate Tax Savings" to see your results
Understanding S Corporations
Key Benefits: S Corporations can save on self-employment taxes by allowing business owners to take a portion of their income as distributions (not subject to FICA/Medicare taxes) rather than salary.
Reasonable Salary Requirement: The IRS requires S Corp owners to take a "reasonable salary" based on industry standards, qualifications, and business size.
Comparing Entity Types
Sole Proprietorship: Simplest structure but all income is subject to self-employment tax (15.3%).
LLC (Single Member): Limited liability protection with pass-through taxation similar to a sole proprietorship.
S Corporation: Tax advantages through salary/distribution split but has more compliance requirements and costs.
Calculator Features
- Entity Comparison: See tax differences between business structures
- Salary Optimization: Find the optimal salary/distribution split
- Save Scenarios: Save different business scenarios for comparison
- Visualizations: Charts and graphs to understand your tax situation