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FINANCE · SMALL BUSINESS

S-Corp optimizer.

Self-employment tax savings, owner salary, and distribution split — modeled with an IRS-reasonable-comp lens.

THE READ

Most S-Corp owners pay the default. You just saw the split that keeps you compliant and cuts the tax bill.

About the S-Corp Tax Savings Calculator

The S-Corp Tax Savings Calculator helps self-employed individuals and small business owners estimate how much they could save by electing S-Corporation status. It models the optimal split between salary (subject to payroll taxes) and distributions (not subject to self-employment tax) while keeping the salary at a "reasonable compensation" level that the IRS would accept.

Frequently Asked Questions

How does an S-Corp save on taxes?▼
As a sole proprietor or LLC, all business profit is subject to 15.3% self-employment tax (Social Security + Medicare). With an S-Corp election, only your salary is subject to payroll taxes — the remaining profit taken as distributions avoids self-employment tax. On $150,000 in profit, this can save $10,000-20,000 annually.
What is "reasonable compensation" for an S-Corp?▼
The IRS requires S-Corp owners who perform services to pay themselves a "reasonable" salary before taking distributions. This is based on what someone in a similar role, industry, and location would earn. Setting salary too low triggers IRS scrutiny. A common benchmark is 40-60% of total business income.
When does S-Corp status make financial sense?▼
S-Corp election typically makes sense when your business consistently earns $50,000+ in profit after reasonable compensation. Below that threshold, the additional accounting costs, payroll processing fees, and tax filing complexity may outweigh the tax savings.

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NOT ADVICE

Educational model · not personalized advice · projected outcomes are uncertain.

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