Will an S-Corp actually save you money — or just add paperwork?
Enter your net profit and the salary you'd pay yourself. We compare SE tax as a sole prop vs payroll tax on an S-Corp salary, minus realistic admin costs.
Tax and payroll data last updated: July 2026. Sources & methodology
Your numbers
What the business earns after expenses, before your salary.
Must be reasonable for the work you do — IRS scrutinizes low salaries.
Payroll service, extra CPA fees, state unemployment — typically $1,500–3,500.
$8,478 SE tax saved minus $2,400 admin.
- Sole prop SE tax
- $16,955
- S-Corp payroll tax on salary
- $8,478
- Distribution (no SE tax)
- $60,000
- Payroll admin cost
- $2,400
Compares SE tax only. S-Corp adds formation, payroll, and reasonable-salary rules. Federal income tax is similar when net profit is unchanged. Get a CPA before electing S status.
How this is calculated
As a sole proprietor, all net profit faces 15.3% self-employment tax (Social Security and Medicare on 92.35% of earnings). With an S-Corp, only your W-2 salary from the corporation faces payroll tax — profit left as distributions avoids the SE tax stack.
The IRS requires a reasonable salary, so you cannot pay yourself $0 and distribute everything. This calculator shows the SE tax delta minus payroll filing costs so you can see if the election pays for itself before you hire a CPA to set it up.