LLC vs S-Corp Tax Comparison Calculator
See how much you could save by electing S-Corp status for your LLC.
Formula
LLC Tax = (Income x 92.35% x 15.3%) + Federal Income Tax + State Tax. S-Corp Tax = (Salary x 15.3%) + Federal Tax on (Salary + Distribution) + State Tax + Admin Costs. Savings = LLC Tax - S-Corp Tax.
Frequently Asked Questions
When does it make sense to elect S-Corp status?
Generally, S-Corp election becomes beneficial when net business income exceeds $50,000-$60,000 per year. Below that, the additional costs of payroll, tax filings, and administration may offset the self-employment tax savings.
What is a reasonable salary for an S-Corp?
The IRS requires S-Corp owners who perform services to pay themselves a 'reasonable salary' before taking distributions. This is typically 40-60% of net business income, and should be comparable to what you would pay someone else to do your job.
What are the downsides of S-Corp election?
S-Corp adds complexity: mandatory payroll processing ($1,000-2,000/year), additional tax filings (Form 1120-S), stricter recordkeeping requirements, and potential IRS scrutiny if your salary is set too low.
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