LLC vs Sole Proprietor Tax Calculator

About this calculator

A sole proprietor (or default single-member LLC) pays self-employment (SE) tax of 15.3% — 12.4% Social Security plus 2.9% Medicare — on essentially all net business income. Electing S-corp tax treatment for an LLC changes that: the owner becomes a W-2 employee, payroll (FICA) tax at the same 15.3% rate applies only to a “reasonable salary,” and the remaining profit can be taken as a distribution that is free of SE/payroll tax (though still subject to income tax).

Accountants and small-business owners use this comparison to see whether the payroll-tax savings from an S-corp election are worth its added costs — running payroll, filing a separate corporate return, and paying yourself a defensible salary the IRS won’t challenge as artificially low. This calculator takes your net income, a reasonable salary figure, and your tax rate to estimate the potential SE-tax savings; it’s an educational estimate, not tax advice.