Free calculator

Should you be an S-corp?

Above a reasonable salary, S-corp distributions skip the 15.3% self-employment tax. Estimate your annual savings, net of the extra payroll and filing cost. It's a rough guide. Confirm with your CPA.

Net profit (before your pay) · business profit available to you$Reasonable salary · what you'd pay yourself as W-2$Extra S-corp cost / year · payroll + tax prep$

$70,000

Distribution

profit above the salary

$9,891

Est. tax saved / year

+$7,891

Worth it (est.)

after the extra cost

As an S-corp, profit taken above a reasonable salary (the distribution) skips the 15.3% self-employment tax. Whether it pays depends on the gap between your profit and a reasonable salary more than on any single profit threshold, so run your numbers. This is a rough estimate: the Social-Security portion caps at the wage base, and reasonable-salary rules matter. Confirm with your CPA before electing.

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