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S-Corp Tax Savings Calculator

Estimated Annual Business Net Income ($): Salary as S-Corporation ($): Self-Employment Tax Rate (%):

S-Corp Tax Savings Calculation Result

Name	Result
Self-Employment Tax if Sole Proprietor or LLC:
Self-Employment Tax as an S-Corporation:
Total Self-Employment Tax Savings:
Disclaimer	Don’t Rely On The Calculator, Do It Manually Too. Based On Estimates Only*

The Reasonable Compensation S Corp Calculator is an invaluable tool for both business owners and tax professionals alike.

One of the key advantages of using this calculator is that it helps ensure compliance with IRS guidelines regarding reasonable compensation.

Actual Compensation S Corp may depend on several factors but the calculators provide you very close estimates.

How To Use The S Corp Calculator

Here’s a basic example of how to use the Reasonable Compensation S Corp Calculator with dummy values:

Let’s say you have an Estimated Annual Business Net Income of $60,000, and you plan to pay yourself a salary of $45,000 as an S-Corporation owner.

You also want to use a Self-Employment Tax rate of 15%:

Enter $60,000 in the “Estimated Annual Business Net Income” input field.
Enter $45,000 in the “Salary as S-Corporation” input field.
Enter 15 in the “Self-Employment Tax Rate (%)” input field.
Click the “Calculate” button.

The calculator will then perform the following calculations:

Self-Employment Tax if Sole Proprietor or LLC: $60,000 * 0.15 = $9,000
Self-Employment Tax as an S-Corporation: $45,000 * 0.15 = $6,750
Total Self-Employment Tax Savings: $9,000 – $6,750 = $2,250

The results will be displayed in the respective fields. In this example, you would see:

Self-Employment Tax if Sole Proprietor or LLC: $9,000
Self-Employment Tax as an S-Corporation: $6,750
Total Self-Employment Tax Savings: $2,250

This demonstrates how you can use the S Corp Calculator with your values to estimate your Self-Employment Tax savings when operating as an S-Corporation.

Reasonable Compensation S Corp Calculator Formula

The S Corp Calculator uses the following formulas to calculate the results:

Self-Employment Tax if Sole Proprietor or LLC:

Self-Employment Tax = Net Income * Self-Employment Tax Rate

Self-Employment Tax as an S-Corporation:

Self-Employment Tax = S-Corp Salary * Self-Employment Tax Rate

Total Self-Employment Tax Savings:

Tax Savings = Self-Employment Tax if Sole Proprietor or LLC – Self-Employment Tax as an S-Corporation

The “Self-Employment Tax Rate” is provided by the user as a percentage and needs to be divided by 100 to convert it to a decimal before applying these formulas.

Final Thoughts

The Reasonable Compensation S Corp Calculator is an invaluable tool for small business owners who want to ensure they are paying themselves a fair salary.

The calculator provides very close estimation but you need to do your manual work along with the calculator.

Thank You!