Should I choose an S-corp for my business in 2025?
Compare a sole proprietor vs S-corporation tax outcome for 2025 or 2026 by modeling reasonable salary, distributions, and payroll tax impact. This simulation estimates potential SE tax savings and highlights trade-offs so you can explore whether an S-corp election could help.
How this calculation works
- Estimates SE tax for a sole proprietor using net profit.
- Models an S-corp salary and distribution split with payroll taxes.
- Compares total federal tax and potential savings.
Common mistakes and caveats
- Reasonable salary rules are complex and fact-specific.
- Entity setup and payroll costs are not included.
- State taxes can change the comparison.
FAQ
Does this account for payroll and setup costs?
No. It focuses on tax impact; setup and ongoing costs should be considered separately.
TaxGuide Pro provides free state and federal tax calculators for individuals, freelancers, and small businesses.