Free tool · For service-business owners
How much could S-Corp election save you?
Most owners hit a tax cliff somewhere between $50k–$70k of profit and don't realize it until tax time. This calculator estimates your annual self-employment tax savings if you elect S-Corp — and nets out the cost of running one.
Your business
IRS expects this to reflect what you'd pay someone else for the same role. Service-business rule of thumb: 40–60% of net profit, never below market rate for the work.
Estimated annual savings
$9,304/yr
After typical S-Corp setup & maintenance costs ($2,000/yr).
Breakdown
- Net profit (SE income today)
- $150,000
- Reasonable W-2 comp under S-Corp
- $70,000
- Distribution portion (no SE tax)
- $80,000
- Self-employment tax saved
- $11,304
- – S-Corp setup & payroll (annual)
- –$2,000
- Net annual savings
- $9,304
Want this verified by an actual bookkeeper?
Pree Poonati (ex-Ernst & Young) will review your numbers and tell you whether the savings are real for your specific situation. No charge, no pitch.
Estimate only. This calculator uses standard self-employment tax math (15.3% on net SE earnings up to the Social Security wage base, 2.9% Medicare above) and a flat estimated S-Corp annual cost ($2,000 covering federal 1120-S filing, payroll setup, state filings). It does not account for state-specific S-Corp franchise taxes (especially California's $800 minimum), the 0.9% Additional Medicare Tax above $200k single / $250k joint, QBI deduction interaction, or your individual income-tax bracket. Always confirm with a CPA before electing — Nirvana Solutions can model your exact scenario.