S-Corp Tax Savings Calculator
S-Corp Tax Savings
Compare the self-employment tax burden of a sole proprietorship versus an S-corporation election
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Formula
Tax Savings = (Net Income x 0.9235 x 15.3%) - (Salary x 15.3%) - Additional S-Corp Costs
Frequently Asked Questions
When does an S-corp election make sense?
An S-corp election generally becomes beneficial when your net business income exceeds $50,000 to $60,000 per year, as the self-employment tax savings begin to outweigh the additional administrative costs.
What is a reasonable salary for an S-corp?
The IRS requires S-corp owners to pay themselves a reasonable salary comparable to what other businesses pay for similar services. This is typically 50 to 70 percent of net income.
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