Free tool
The S-Corp question,
answered in about ten seconds.
Electing S-Corp status is one of the few decisions where a small business can save real money with a single form. It's also one where the wrong call costs you in payroll and filing fees for nothing.
This calculator shows both sides honestly — including when the answer is “not yet.” No email, no gate, no follow-up sequence.
How the math works
Self-employment tax applies to 92.35% of net profit at 15.3% up to the Social Security wage base of $176,100, then 2.9% Medicare above it, plus 0.9% additional Medicare over $200,000. An S-Corp owner pays those rates only on their W-2 salary. We subtract California's 1.5% S-Corp tax (minimum $800) and the annual cost of the business return and payroll.
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Would an S-Corp save you money?
Move the sliders. The number updates as you go.
Revenue minus expenses, before paying yourself.
The W-2 wage you'd pay yourself. The IRS requires it to be reasonable for the work you do.
Estimated first-year savings, after our fees
$5,396
Self-employment tax saved: $8,693. Minus $1,497 for the business return and payroll and $1,800 in California S-Corp tax.
Estimate only, using 2025 federal rates. It does not account for the QBI deduction, your other income, state income tax, or your specific facts — all of which can move the answer materially. This is not tax advice. Talk to us before making an election.
Before you elect anything
How does an S-Corp actually save tax?
As a sole proprietor or single-member LLC you pay self-employment tax on essentially all your net profit. As an S-Corp owner you pay FICA only on the W-2 salary you take; the rest passes through as a distribution that isn't subject to FICA. That gap is the savings.
What counts as a 'reasonable' salary?
The IRS requires the salary to be reasonable for the work you actually perform — roughly what you'd pay someone else to do your job. Set it too low and the election becomes an audit target. This is the part worth getting a professional opinion on, not a slider.
Why does California reduce the savings?
California charges S-Corps a 1.5% tax on net income with an $800 annual minimum, on top of the franchise tax. It doesn't usually erase the benefit, but it does move the break-even point higher than in most states, which is why the calculator subtracts it.
What isn't in this estimate?
The QBI deduction, your spouse's income, your other income sources, state income tax, health insurance treatment, retirement plan contributions, and payroll processing costs beyond our fee. Any of these can move the answer materially in either direction.
At what profit does an S-Corp usually start making sense?
For most California businesses the math turns positive somewhere in the $60k–$90k net profit range, but it depends heavily on the reasonable salary you'd have to pay. Use the sliders to find your own break-even, then bring it to a call before electing anything.