LLC / Sole Prop
Disregarded entity
CurrentFederal income tax$26,055
SE / payroll tax$21,194
State income tax$13,950
Total tax
$61,199
Net after-tax income$88,801
Effective federal rate17.4%
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LLC, S-corp, or C-corp — which saves you more?
Enter your net business profit to see a side-by-side tax comparison across all three entity structures. Find the crossover point where an S-corp election starts paying off — and how much you could save. Not sure how this works? Read the guide
Entity structure analyzer
Find your optimal business entity structure.
Compare LLC, S-corp, and C-corp tax treatment side by side. See exactly when an S-corp election starts saving you money and whether a C-corp structure is worth considering. Illustrative 2026 estimates — not tax advice.
Your situation
$50K$150,000$2M
S-Corp
Comp: $60,000
Federal income tax$28,598
SE / payroll tax$9,180
State income tax$13,950
Total tax
$51,728
Net after-tax income$98,272
Effective federal rate19.1%
C-Corp
21% flat + dividend tax
Federal income tax$31,500
Dividend tax$15,786
State income tax$13,260
Total tax
$60,546
Net after-tax income$89,454
Effective federal rate21.0%
S-Corp break-even
S-corp election typically makes sense above $50,000 net profit. At your income, the estimated annual savings are $9,471 vs. LLC treatment.
C-Corp note
C-corps can make sense for retained earnings strategies, QSBS eligibility, or investor fundraising — but double taxation applies on distributions. This estimate assumes full distribution of after-tax profits.
Planning notes
- LLC and S-corp pass-through income may qualify for the 20% QBI deduction (§199A) — not modeled here.
Bottom line
At $150,000 net profit, the S-corp election saves roughly $9,471/year over LLC treatment — enough to justify the payroll overhead. The main thing you need: file Form 2553 with the IRS, set up payroll, and set a defensible salary. Use the S-Corp Salary Calculator to find the right number.
Illustrative estimates only. Using 2026 federal tax brackets and flat state rate approximations. Does not constitute tax or legal advice. Payroll administration costs not included in S-corp estimates. QBI (§199A) deduction not modeled. Consult a CPA for personalized analysis.
Also read
S-corp planning
LLC vs S-Corp: Which Business Structure Is Right for You?
An LLC is a legal structure; an S-corp is a tax election — and most S-corp owners have both. When the S-corp election saves money, when it doesn't, and what the compliance costs actually are.
Read S-corp planningHow to Actually Elect S-Corp Status: Form 2553, Deadlines, and What Happens Next
The calculator said it's worth it. Now what? A step-by-step guide to filing Form 2553, the March 15 deadline, late election relief, and what to set up in the first month as an S-corp.
Read Tax planningSelf-Employment Tax Explained: Rates, Calculation, and How to Reduce It
Self-employment tax is 15.3% on net profit — on top of income tax. How SE tax is calculated, what the deductible half actually saves, and the three ways to reduce it.
Read Tax deductionsSolo Service Business Tax Deductions: The Complete Checklist
Eight deductions every sole prop and freelancer should be claiming — with dollar values at $100k and $150k net profit. None require an S-corp.
ReadReese Tax & Wealth
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Tax services provided through Matt Reese, CPA. This page is educational and does not constitute tax or investment advice.