Does electing S corp status pay off? Compare self-employment tax on all your profit with payroll taxes on a reasonable salary, minus the extra running costs.
Taxed as a sole prop / single-member LLC
Self-employment tax on all profit–
Taxed as an S corp
Payroll taxes on your salary (employee + employer)–
Extra running costs–
–
Assumptions: Tax year 2026 · Social Security 12.4% up to $184,500, Medicare 2.9% · salary must be reasonable for the work you do · compares payroll/SE taxes only — income tax effects (QBI deduction, deductible payroll costs) and state taxes are not included
An estimate for general information only. Figures checked on 8 October 2026 against SSA and IRS sources. Tax rules change and every business is different — for advice on your situation, talk to a CPA.
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