[FREE GUIDE] TAX SECRETS FOR THE SELF EMPLOYED Download
LLC vs S Corp Tax Savings Calculator
Enter your business income below. We calculate your SE tax as an LLC vs. as an S Corp and show you the exact annual savings.
All figures are annual. Use your best estimate for the current tax year.
$
$
$
How the LLC vs S Corp Calculator Works
This calculator compares your self-employment tax burden as a single-member LLC (taxed as a sole proprietor) versus an S Corporation. As an LLC, 100% of your net income is subject to the 15.3% self-employment tax (12.4% Social Security + 2.9% Medicare). As an S Corp, only your owner salary is subject to payroll taxes — your distributions are not.
When Does an S Corp Make Sense?
The S Corp election typically makes financial sense when your net self-employment income exceeds $50,000-$60,000 per year. Below that threshold, the cost of running payroll and filing a separate corporate return ($1,500-$3,000/year) often exceeds the tax savings.
California-Specific Considerations
California charges S Corps a 1.5% franchise tax on net income (minimum $800). This partially offsets the SE tax savings. However, for most California business owners earning $80,000+ in net income, the S Corp election still produces significant net savings after accounting for the state franchise tax.
Frequently Asked Questions
Q: Can any LLC elect S Corp status?
A: To elect S Corp status, your LLC must meet IRS requirements: no more than 100 shareholders, all shareholders must be US citizens or residents, and only one class of stock is allowed.
Q: What is a "reasonable salary"?
A: The IRS requires S Corp owner-employees to pay themselves a reasonable salary for the services they perform. The IRS looks at industry norms, the company's profitability, and what a comparable employee would earn. KDA typically recommends 40-60% of net income as a starting point.
Q: When is the S Corp election deadline?
A: To be effective for the current tax year, Form 2553 must be filed by March 15 (for calendar-year corporations). Late elections may be accepted with reasonable cause.
Related Resources
More California Tax Calculators
Self-Employment Tax
Calculate your SE tax burden.
Business Tax Estimator
Estimate your total business tax.
1031 Exchange Calculator
Calculate your tax deferral.
Property Tax & Prop 13
See your Prop 13 savings.
Capital Gains Calculator
Calculate your gains tax.
Prop 13 Scenario Calculator
Compare hold vs sell vs move.
Want KDA to Run the Exact Numbers for Your Situation?
Calculators give you a starting point. KDA gives you a complete tax strategy — identifying every deduction, optimizing your entity structure, and building a year-round plan to minimize your California tax burden.
Book a Free Consultation