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W-2 vs 1099 vs S Corp Calculator
Weighing a job against working for yourself? Compare what traditional employment and self-employment each leave you after employment tax and benefits, and what an S Corp changes once you are running a business.
1Traditional employment
The job you have, or the offer you are weighing.
Employer-paid, per month
% of salary
2Self-employment
Running your own business, with the revenue and costs that come with it.
Software, equipment, insurance and anything else the business pays for.
Wages from a job outside this business. They use up part of the Social Security wage base, so they shrink the saving.
We assume you buy your own health plan at the same monthly cost as the one the employer pays for.
To keep what your $150,000 job leaves you, your business needs about $205,992 in revenue.
As an S Corp, the same business gets there on about $192,294, because payroll tax applies to your salary rather than all of your profit.
$10,790/yr less self-employment tax as an S CorpW-2 employee
TraditionalYour employer pays half of FICA and your health plan.
Salary
$150,000
Your half of FICA
−$11,475
401(k) match
+$6,000
Health plan
Employer-paid
Covered
Estimated amount you keep before income tax
$144,525
Self-employed
Sole prop / LLCYou pay both halves of FICA as self-employment tax.
Revenue
$180,000
Business expenses
−$30,000
Self-employment tax
−$21,194
Health plan
You buy this yourself
−$6,600
Estimated amount you keep before income tax
$122,206
Self-employed as an S Corp
The upgradePayroll tax on a reasonable salary, not on all of your profit.
Revenue
$180,000
Business expenses
−$30,000
Payroll tax
On a $68,000 salary
−$10,404
Health plan
−$6,600
Estimated amount you keep before income tax
$132,996
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 and benefits only: FICA on a W-2 salary, self-employment tax as a sole proprietor, and payroll tax on a 45% salary as an S Corp. It does not model federal or state income tax, the QBI deduction or retirement contributions, and it uses the single-filer threshold for the additional Medicare surtax. Talk to an accountant before you change how you are paid.
This calculator is intended solely for illustrative purposes and may not accurately reflect your unique circumstances. Collective cannot guarantee the accuracy of estimates.
Running a business is not the same as taking a contract
Going self-employed means you pay both halves of Social Security and Medicare yourself, on top of the benefits an employer used to cover. An S Corp can shrink that self-employment tax, but it is a way to run an ongoing business: payroll, a reasonable salary and an extra return every year. It is not a structure to set up for one short-term contract.
Ready to see what an S Corp would actually save you?
Collective handles the formation, payroll, and filings, so the numbers above stop being hypothetical.