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S Corp vs LLC calculator
An LLC is a legal entity. An S Corp is a tax election you can make on top of it. See what that election would actually save you in self-employment tax.
1The profit your business keeps
Use annual net profit after ordinary business expenses, but before paying yourself.
2What you pay yourself
An owner who works in the business has to take a reasonable salary. Payroll tax applies to that salary; the rest can come out as a distribution.
We suggest 45% of profit as a starting point. Your duties, hours and comparable market pay are what actually set a reasonable salary.
Wages from a job outside this business. They use up part of the Social Security wage base, so they shrink the saving.
An S Corp election looks worth it
$10,790 a year
Self-employment tax you would stop paying, less payroll tax on your salary.
As a default LLC
Self-employment tax on 92.35% of profit
Social Security
$17,177
Medicare
$4,017
Employment tax
$21,194
As an S Corp
Payroll tax on the salary only
Reasonable salary
$68,000
Distribution
After employer payroll tax
$76,798
Payroll tax
$10,404
Collective runs the S Corp for you on the S Corp plan: $349 a month, or $3,560 a year billed annually. That covers payroll, filings and the extra return. It is a membership, not a tax, so it is not part of the savings above.
An estimate, not a tax return. This compares employment tax only: self-employment tax as an LLC against payroll tax as an S Corp. It does not model federal or state income tax, the QBI deduction, unemployment tax, retirement contributions or credits, and it uses the single-filer threshold for the additional Medicare surtax. Talk to an accountant before making an election.
This calculator is intended solely for illustrative purposes and may not accurately reflect your unique circumstances. Collective cannot guarantee the accuracy of estimates.
We handle the election, the payroll and the filings
Collective files your S Corp election, runs the payroll that keeps your salary defensible, and takes care of the extra return it brings with it.