Should I be taxed as an LLC or S-Corp?

If your net profit exceeds $50,000, electing S-Corp status often saves on self-employment taxes. Below that threshold, the administrative costs of S-Corp status typically outweigh the savings.

How much can an S-Corp save on taxes?

By paying yourself a reasonable salary and taking remaining profit as distributions, you avoid self-employment taxes on the distribution portion. Savings range from $2,000 to $15,000+ depending on profit level.

When does it make sense to elect S-Corp status?

Most tax advisors recommend considering S-Corp election when your net profit consistently exceeds $40,000–$50,000 per year. Factor in the $1,000–$2,500 annual administrative cost.

LLC vs S-Corp Tax Savings Calculator 2026

Your Numbers

Annual net business profit (after expenses, before taxes)

Reasonable S-Corp owner salary (IRS requires a "reasonable" salary for your role)

Estimated annual S-Corp admin cost (payroll service + accountant extra fees)

Results

Enter your annual profit and your expected salary to see how much switching to S-Corp could save you each year.

Your Estimated Tax Comparison

LLC self-employment tax

15.3% on 92.35% of net profit

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S-Corp payroll taxes

15.3% on salary only (split employer/employee)

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S-Corp admin cost

Payroll service + accountant

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Net annual savings (S-Corp)
Tax reduction minus admin overhead
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This calculator is for informational purposes only. Results are estimates based on the inputs you provide. Consult a qualified financial professional before making business decisions.