S-corp vs. sole proprietor savings calculator

If you're a profitable sole proprietor or single-member LLC, electing S-corp status can cut your self-employment tax — but only after the added costs. This estimates the net, with California's S-corp taxes built in.

Annual business net profit

Your net profit before any owner salary.

Reasonable owner salary

What you'd pay yourself as W-2 wages for the work you do.

Added annual cost of an S-corp

Payroll service + the extra 1120-S return.

Include California S-corp taxes ($800 minimum + 1.5% of net income)

Total tax + cost by structure

Is an S-corp actually right for you? This is the tax side only — let's run your real numbers, salary, and QBI together.

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Estimate only, for planning — not tax advice. Compares federal self-employment tax (15.3%: 12.4% Social Security up to the $184,500 wage base for 2026, plus 2.9% Medicare) against S-corp payroll tax on your salary, then nets out the added cost of running an S-corp and, where selected, California's 1.5% S-corp tax with its $800 minimum franchise tax. It does not model income tax, the reduction in your QBI (§199A) deduction from paying yourself wages, California payroll taxes on those wages (SDI/UI/ETT), the Additional Medicare Tax, or retirement-plan effects. Your salary must be reasonable for the work you perform — an unreasonably low salary is a primary IRS audit trigger. Confirm with a CPA before electing.