Business Entity Comparison Calculator

This calculator estimates and compares total annual tax cost across three business structures: sole proprietorship/LLC, S-Corp, and C-Corp. Net Business Income is the input that dominates every total: as a pass-through structure's LLC/Sole Prop and S-Corp figures and the C-Corp's flat 21% corporate rate both scale directly with it, it moves every output far more than any other input. The LLC/Sole Prop path applies self-employment tax (15.3%, capped at the Social Security wage base) to net income, plus personal income tax on the full amount. The S-Corp path assumes you split net income into a 'reasonable salary' (subject to payroll tax) and a distribution (not subject to payroll tax) — raising the salary shifts more income into the payroll-tax-exposed bucket, which is why a higher Reasonable Owner Salary raises S-Corp Total Tax rather than lowering it.

The C-Corp path applies the flat 21% federal corporate rate set by IRC Section 11, as amended by the 2017 Tax Cuts and Jobs Act, then an approximate 23.8% tax (top capital-gains rate plus the 3.8% Net Investment Income Tax) on whatever is left, assuming full distribution as dividends. State Filing Fee is added equally to all three totals, so it affects each structure's absolute Total Tax but never changes the S-Corp Savings vs LLC comparison. This tool does NOT account for the Qualified Business Income (QBI) deduction, state income tax, payroll processing costs, retained (undistributed) C-Corp earnings, or the specific state-by-state rules that govern what counts as a 'reasonable salary' for the IRS. All figures (the 15.3% SE tax rate, the 21% federal corporate rate, and the Social Security wage base) should be verified against current IRS guidance for your filing year — the wage base in particular changes annually.