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LLC vs S-Corp Tax Comparison

Compare estimated tax outcomes across LLC, S-Corp, and sole proprietor structures using your projected income.

Business Details

Net Business Profit

S-Corp Reasonable Salary

Filing Status

State

Annual S-Corp Admin Costs (accounting, payroll, etc.)

LLC vs S-Corp: Which Business Structure Saves You More on Taxes?

One of the most common questions for small business owners and self-employed professionals is whether to operate as a single-member LLC (taxed as a sole proprietorship) or to elect S-Corp status. The answer depends almost entirely on how much you earn and how much you can reasonably pay yourself as a salary.

How LLC (Sole Prop) Taxes Work

As a sole proprietor or single-member LLC, you pay self-employment (SE) tax on 92.35% of your net business profit. The SE tax rate is 15.3% — composed of 12.4% for Social Security (on earnings up to $184,500 in 2026) and 2.9% for Medicare (uncapped). If your earnings exceed $200,000, an additional 0.9% Medicare surtax applies. You can deduct half of your SE tax when calculating your adjusted gross income.

How S-Corp Taxes Work

With an S-Corp election, you split your business income into two buckets: a “reasonable salary” (subject to FICA payroll taxes) and remaining distributions (not subject to FICA). The employer pays 7.65% and the employee pays 7.65% on the salary portion. By keeping your salary at a defensible but moderate level, the distributions escape the 15.3% payroll tax entirely.

The Trade-Off: Admin Costs

S-Corps require payroll processing, a separate corporate tax return (Form 1120-S), and often additional bookkeeping. These costs typically run $1,500–$5,000+ per year depending on complexity. If the payroll tax savings do not exceed these administrative costs, the S-Corp election is not worth it.

Standard Deductions (2026)

Single: $16,100
Married Filing Jointly: $32,200
Married Filing Separately: $16,100
Head of Household: $24,150

Key Takeaway

If your net business profit is consistently above $40,000–$50,000, modeling both scenarios with this calculator can reveal significant annual savings. Always consult a CPA to determine the right reasonable salary and to ensure compliance with IRS guidelines.

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Sources & Verification

Tax rates verified against official government sources for current published tax years

IRS HM Revenue & Customs (HMRC)Canada Revenue Agency (CRA)Australian Taxation Office (ATO)

Published by ConvertCrunch Editorial Team | Our Methodology

Frequently Asked Questions

What is the LLC vs S-Corp Tax Comparison?

The LLC vs S-Corp Tax Comparison is a free browser-based tool on ConvertCrunch. Compare estimated tax outcomes across LLC, S-Corp, and sole proprietor structures using your projected income. It requires no downloads, installations, or account signups. Simply enter your values and get instant, accurate results. The tool is designed for quick calculations and informed decision-making, whether you are a professional, student, or everyday user looking for reliable answers.

How do I use the LLC vs S-Corp Tax Comparison?

Using the LLC vs S-Corp Tax Comparison is straightforward. Enter your values into the input fields provided on the page, then calculate or adjust parameters to explore scenarios. Most processing happens locally in your browser. If a feature uses a third-party service, the tool identifies that connection and the privacy policy explains it. Most users get the answers they need in under a minute.

Is the LLC vs S-Corp Tax Comparison free to use?

Yes, the LLC vs S-Corp Tax Comparison is completely free to use with no account signup, email requirement, or premium tier. Most calculations run locally in your browser. Features that depend on live data or a third-party service require a network connection and are identified in the tool. You can use it as many times as you need for personal, educational, or professional purposes.

How accurate is the LLC vs S-Corp Tax Comparison?

The LLC vs S-Corp Tax Comparison uses current tax rates, brackets, and thresholds published by the relevant tax authority. It is designed for estimation and planning purposes and produces results consistent with official guidelines. However, individual tax situations can be complex, and this tool does not replace professional tax advice. Always verify results with a qualified tax professional or the applicable government agency before making financial decisions.

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