Resources
Rough numbers, honestly labelled.
These are estimates meant to tell you whether a conversation is worth having. They are not advice, and they deliberately ignore the details that only matter once you are serious.
Estimator
Is an S-corp election worth it?
The S-corp election saves self-employment tax on profit distributed above a reasonable salary. Below a certain profit level, the added payroll and filing cost outweighs the saving.
Must reflect market rate for the work you actually do. Setting it low is the most commonly assessed S-corp error.
Payroll processing, the 1120S return, and state filing fees.
Estimate only. Uses 15.3% combined Social Security and Medicare on earnings up to the wage base, 2.9% Medicare above it, and the 0.9% additional Medicare surcharge over $200,000. It ignores state tax, the qualified business income deduction, and your personal circumstances — all of which can change the answer materially.
Before you elect
The election is the easy part. The salary is not.
Reasonable compensation is a legal standard, not a preference, and it needs documenting in the year you set it. We run the comparable data and write the file.