S-Corp Savings vs. Non
Compare self-employment tax (sole prop) vs payroll tax (S-Corp). Optional state payroll tax on W-2 (S-Corp only). Add back payroll and bookkeeping costs to see net savings. Not tax advice.
Income & salary
Net business income as sole prop or pass-through.
Reasonable compensation if you elect S-Corp.
Used for additional Medicare threshold.
Year-specific cap for SS tax (e.g. 2026).
e.g. SUTA, state disability. Reduces net savings.
S-Corp costs (add back)
Payroll and bookkeeping are typical S-Corp expenses. Toggle and adjust amounts to see net savings.
Sole prop: self-employment tax
$16,955
On 92.35% of profit (SS + Medicare).
S-Corp: payroll tax on salary
$12,240
Only on W-2 salary; distribution is not subject to this tax.
Payroll/SE tax savings
$4,715
S-Corp costs (Gusto + QuickBooks)
−$1,200
Net savings (after costs & state payroll)
$3,515
Federal and state income tax are the same for both (taxable income = profit); net savings is payroll/SE difference minus S-Corp costs and state payroll on W-2.