The Number Behind the Break-Even Range
The S-Corp vs. LLC guide already covers why “S-Corp vs. LLC” is a bit of a misnomer, S-Corp is a tax election, not a competing entity type, so this tool compares what actually differs: paying yourself as a default LLC or sole proprietorship versus electing S-Corp status on that same LLC. It also covers why the break-even point usually falls somewhere between $50,000 and $80,000 in net profit, a range, not a single number, since it depends on your specific salary choice and what the paperwork actually costs you to run. This tool turns that range into your actual number.
S-Corp Break-Even Calculator
Plug in your net profit and a proposed salary, see the actual dollar savings instead of eyeballing a break-even range.
Your Numbers
Default (LLC/Sole Prop) vs. S-Corp Tax Owed
Compares self-employment tax under default taxation, a sole proprietorship and a default single-member LLC are taxed identically, against FICA on your proposed S-Corp salary only, the core mechanic behind the S-Corp election. Doesn’t model income tax, QBI effects, or the added yearly cost of payroll and a separate tax return (typically $1,500 to $3,000, covered in the guide below), all of which move the real number around enough that this is a starting point for a conversation with a tax preparer, not a final answer. Your salary still needs to be defensible as “reasonable” for your work, this tool doesn’t judge that for you.
How This Comparison Works
As a default LLC or sole proprietorship, they're taxed identically until you elect otherwise, self-employment tax runs 15.3% on your full net profit (technically 92.35% of it), no way around it. Elect S-Corp status, and that changes: you pay yourself a salary through payroll, FICA applies there the same way it would at any job, and whatever's left over comes out as a distribution that skips payroll tax entirely. The gap between what SE tax would have cost under default taxation and what S-Corp FICA actually costs on just the salary portion, is the real savings this tool calculates.
What This Tool Doesn't Model
Three things worth knowing before you treat this number as final.
First, income tax and the QBI deduction aren't included, for most readers under the 2026 QBI threshold ($201,750 single, $403,500 married), that side of the math runs roughly the same either way, so leaving it out keeps the tool focused on the part that actually differs.
Second, the tool flags a salary under 25% of profit as a caution, but it can't tell you whether your specific number is genuinely defensible, that depends on comparable pay for your trade, which is a judgment call, not a calculation.
Second and a half: the added yearly cost of actually running an S-Corp, payroll processing and the extra Form 1120-S return, typically $1,500 to $3,000, isn't in this tool's math either. It's a real cost, but it's small and steady enough that it belongs in the conversation with your tax preparer rather than baked into a calculator that already isn't modeling income tax.
Third, some states charge their own S-Corp-specific fees or franchise taxes on top of the federal picture, worth checking your state separately.
Want the Full Breakdown?
This tool gives you the number. The S-Corp vs. LLC guide covers the rest, the reasonable salary factors the IRS actually weighs, the added costs of running payroll and a separate tax return, the health insurance wrinkle for S-Corp owners, and the Form 2553 election deadline.
Frequently Asked Questions
Your numbers are saved only in your own browser, so they're still there next time you visit, and you can clear them any time with the button above the calculator. Nothing is transmitted anywhere or seen by anyone else.
A salary that low relative to profit is exactly the pattern the IRS scrutinizes most closely when reviewing S-Corp reasonable compensation. The savings this tool shows still assume that salary holds up as defensible, worth checking it against real comparable pay for your trade, not just picking the smallest number that maximizes savings.
No. For most readers under the 2026 QBI threshold, income tax runs roughly the same either way regardless of the salary and distribution split, so this tool focuses specifically on the self-employment tax versus FICA comparison, which is where the real difference actually shows up.
This tool can't determine that for you, it's a judgment call based on your training, your time devoted to the business, and what comparable work pays in your area. The S-Corp vs. LLC guide covers the specific factors the IRS and courts actually weigh when this gets challenged.
Only if you turn on the optional toggle and enter an estimate. Payroll processing and a separate business tax return typically run $1,500 to $3,000 a year combined, worth including so you see the net benefit, not just the gross tax savings.
Yes, especially before actually filing the S-Corp election. This tool is built to show the shape and rough size of the savings so you know whether the conversation is worth having, not to replace the conversation itself.
Sources