Should your business be taxed as an S-Corp or Schedule C entity?
As a sole proprietor, every dollar of profit gets hit with 15.3% self-employment tax on top of income tax.
Electing S-corp status changes that math: you pay yourself a reasonable salary, and the profit above it passes through without that payroll tax. The catch is that the savings only outrun the cost of running payroll and filing a separate return once your profit clears a certain level and setting your salary too low is one of the fastest ways to draw IRS attention.
The calculator below gives you a side-by-side estimate using 2026 federal tax figures. Enter your annual profit, filing status, and industry, then move the salary slider to see how the decision shifts.
This is not intended to be tax advice, but rather a tool to help you estimate the two tradeoffs. Please reach out to us if you have questions or concerns.