S-Corp vs Sole Proprietor Calculator (2026)
Set your net profit and a reasonable salary to see the side-by-side: what you'd owe as a sole proprietor versus as an S-Corp in 2026, the self-employment tax you'd save, and whether it beats the cost of running payroll.
Your business profit and how you file. No sign-up, no documents.
Federal + self-employment tax, your effective rate, and four payment amounts.
Add the four due dates to your calendar and pay directly at IRS.gov.
Your 2026 estimate
Answer a few questions — your numbers update live and never leave this page.
Federal estimate only. Add your state for a combined number.
Your 4 payments
$16,647 for the year- Q1 · Jan – Mar$4,162Due April 15, 2026
- Q2 · Apr – May$4,162Due June 15, 2026
- Q3 · Jun – Aug$4,162Due September 15, 2026
- Q4 · Sep – Dec$4,161Due January 15, 2027
You could save real money with an S-Corp
After ~$1,200–$2,500 in payroll and filing costs, that's about $1,556–$2,856 net — likely worth electing, as long as the salary stays reasonable.
Saved scenarios
Save your current numbers to compare scenarios side by side — sole prop vs S-Corp, a raise, a bigger retirement contribution. Stored only in this browser.
Never miss a tax deadline again
Your numbers have real money on the line
At your income, an S-Corp election, a retirement-plan choice, or one missed deduction can swing your bill by thousands. A flat-fee review catches it — no retainer, no sales pitch.
- ✓Whether an S-Corp actually nets out for you
- ✓Deductions you're leaving on the table
- ✓A retirement plan that cuts this year's tax
Recommended: Shashank Beri, CPA · independent, no obligation
What freelancers actually owe
How an S-Corp lowers your tax
A sole proprietor pays 15.3% self-employment tax on essentially all net profit. An S-Corp splits that profit in two: a W-2 salary you pay yourself, which still owes FICA, and distributions, which don't owe self-employment or FICA tax at all.
Your saving is 15.3% on the distribution portion (capped at the $184,500 Social Security wage base for the 12.4% piece). Everything else — income tax, the standard deduction, the 20% QBI deduction — works out close to the same either way, which is why the comparison comes down to payroll tax.
What counts as a 'reasonable' salary
The catch is that the IRS requires your salary to be reasonable for the work you do — you can't pay yourself $0 and take everything as distributions. Auditors look at what a comparable employee would earn, your role, hours, training, and how much of the business income is from your personal effort versus capital.
A salary that's too low is the single most common way S-Corp owners get into trouble. Many practitioners target a salary somewhere around half of profit as a defensible starting point, then adjust to local market pay for the role. This tool lets you test any salary against the saving.
The real annual cost of an S-Corp
An S-Corp has to run formal payroll (withholding, quarterly 941s, W-2s) and file its own 1120-S return separate from your 1040. Realistically that's $1,200–$2,500 a year between a payroll service and a tax preparer, plus any state S-Corp franchise tax or fee.
That's why the verdict bar nets the cost out: a $4,000 gross saving that costs $2,000 to capture is a very different decision from a $12,000 saving. Below the break-even, staying a sole proprietor is simpler and cheaper.
How and when to elect
You elect S-Corp treatment by filing IRS Form 2553. For it to apply to a given tax year, you generally file by March 15 of that year (there is late-election relief, but don't rely on it). Many owners form an LLC first and then make the S-Corp election on top of it.
Because the election is an annual commitment with real admin, run the numbers before filing — and revisit them each year, since the saving scales with profit.
What this estimate does and doesn't cover
Quarterly calculates 2026 federal income tax and self-employment tax for a sole proprietor or single-member LLC, applies the standard deduction and a simplified 20% QBI deduction, and sizes your four estimated payments. It is a planning estimate, not tax advice.
It does not include state or local income tax, the full QBI wage-and-property limitation that applies to higher earners, the qualified-business-income phase-outs for specified service businesses, itemized deductions, tax credits (child tax credit, premium tax credit, retirement-saver credits), the net investment income tax, or business deductions beyond the half-of-SE-tax adjustment. For anything with real money on the line, confirm with a CPA or enrolled agent.
Common questions
There's no hard line, but the saving commonly clears the ~$1,200–$2,500 yearly cost of payroll and a separate return somewhere around $60,000–$80,000 of net profit. Below that, the cost often eats the saving. Enter your numbers above to find your own break-even.
Read the guides
How much should I set aside for taxes as a freelancer?
The rule of thumb is 25–35% of net profit — here's how to find your exact number for 2026.
Read →Freelancer taxes1099 vs W-2 taxes: why freelancers pay more
Same pay, bigger tax bill. Why 1099 income costs more than a W-2 — and the deductions that close the gap.
Read →DeductionsSelf-employed tax deductions that actually cut your bill
Home office, health insurance, retirement, QBI, half your SE tax — the write-offs that actually lower your bill.
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