Should you elect S-Corp? Unlike every other calculator, this one subtracts real compliance costs most tools conveniently omit. See the honest break-even point.
The problem: Every S-Corp calculator on the internet shows the gross SE tax savings — and stops there. They don't subtract the $2,750–$4,500/year in mandatory compliance costs: payroll service, 1120-S tax return preparation, registered agent fees, and state franchise taxes. A freelancer earning $60K sees "$4,590 in savings" and elects S-Corp — then discovers the compliance costs eat the entire benefit.
This tool gives you: the honest number. Gross savings minus every real compliance cost, with state-specific adjustments (California's $800 franchise tax alone shifts the break-even up significantly). Plus a salary optimization search that finds your ideal reasonable compensation level.
| Line Item | Sole Prop | S-Corp | Difference |
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At what profit level does S-Corp make sense? Assumes 50% salary ratio, your filing status, state, and compliance costs.
| Net Profit | Gross SE Savings | Compliance Costs | Net Savings | Verdict |
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Disclaimer: S-Corp election requires filing Form 2553 with the IRS. This calculator provides estimates only. Calculations use simplified models — actual liability may differ due to AMT, NIIT, itemized deductions, tax credits, and other factors. State tax calculations use 2026 approximations. Consult a CPA before making entity elections. All calculations run in your browser — no data is sent to any server.