Here's a common scenario we've encountered: Hardworking individuals, just like you, consistently overpaying on their taxes. We believe you should only pay what’s fair – not a penny more.
But here's the thing – the IRS isn’t exactly spreading the word on how to save on taxes. That's where we step in.
To make this a reality, our tax experts have crafted an intuitive s corp savings calculator. This tool is more than just a calculator – it's a roadmap to optimizing your tax strategy. Our scorp calculator helps you save money and take action, whether you're considering or already have an S Corp.
There are many reasons S Corps are better than LLCs, but tax savings might be our favorite one.
S Corps, offer a unique blend of corporate structure and tax efficiency, making them ideal for businesses of one. They allow profits and losses to pass directly to shareholders, avoiding the double taxation commonly seen in C Corporations. Pass-through taxation only taxes income once at the individual shareholder level, not at the corporate and personal levels.
In addition to tax benefits, S Corps provide vital protection for personal assets. As separate legal entities, they shield shareholders' personal properties from corporate liabilities and debts. Limited liability protects personal assets, benefiting solopreneurs who want financial efficiency and security in their operations.
Running a business as an S Corporation saves more taxes than being a sole proprietor or an LLC.
You pay self-employment tax on all your earned income if you are a sole proprietor or an LLC. An S Corp can save you money by lowering the amount of your income that is subject to these taxes.
In an S Corp, you pay yourself a salary (as the employee of your business). You can then receive the remaining business income as distributions, which aren't subject to self-employment tax.
If a S Corp vs C Corp Tax Calculator search brought you here, that gets a bit more complex. C Corps can sometimes benefit self-employed individuals, but S Corps typically offer more advantages.
💡 Try our blog: Comparing the difference between an LLC, S Corp, and C Corp to dive into all three.
S Corp taxes are complicated, so talk to a tax expert to ensure you follow the rules correctly. Here's the general process to calculate your S Corp taxes:
Setting a reasonable salary means paying yourself a wage that's comparable to what someone else would earn for similar work in your industry and region.
It's important to set an appropriate salary that's in compliance and doesn't raise any red flags with the IRS.
If your salary is too low compared to your overall profits, it may raise red flags with the IRS. Finding balance is key to staying compliant and taking advantage of the tax benefits of an S Corp structure.
To show how taxes can affect someone, let's look at a marketing consultant who earns $150,000 annually. Please note in this s corp vs llc calculator these are simplified estimates and actual tax liabilities will vary based on factors like state taxes, specific deductions, and other individual circumstances.
Online, you might find other s corp tax calculator excel style, if that is easier for you to navigate.
Self-Employment Tax: 15.3% of $150,000 = $22,950
Income Tax (assumed at a 24% effective rate): 24% of $150,000 = $36,000
Total Tax as LLC:
$22,950 (Self-Employment) + $36,000 (Income Tax) = $58,950
💡 Remember that your reasonable contribution is key when searching for an S Corp tax rate calculator.
Salary Taxes (on $75,000 salary):
Distribution Taxes (on $75,000 distribution):
Total S Corp Tax Estimator:
$5,737.50 (Payroll Tax) + $18,000 (Income Tax on Salary) + $18,000 (Income Tax on Distribution) = $41,737.50
Total Taxes Paid as LLC: $58,950
Total Taxes Paid as S Corp: $41,737.50
In this example, by opting for an S Corp, the consultant could potentially save $17k in taxes.
Try our S Corp tax savings calculator to see how this could impact your business.
If you've been considering an S Corp for your venture or already have one in place, we encourage you to try our S Corporation tax calculator. It'll factor in all relevant information to provide a range of insights from entity selection to benefit opportunities.
It can be particularly beneficial for those currently operating without a structure; you can view it as a s corp vs sole proprietorship tax calculator.
Using an S Corp tax structure can benefit self-employed business owners significantly.
We often hear professionals say they'll get to it next year. But why wait? You're missing out on tens of thousands of dollars in savings. You deserve to keep more of your hard-earned money.
And in our S Corp vs LLC tax calculator, we're S Corp all the way.
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