IRC §1402 · §3121(a) cited

Sole Prop vs LLC vs S-Corp

Pick the entity that keeps the most money in your pocket. Real SE tax math.

Net business income ($/yr)

State

Number of W-2 employees

Willing to run W-2 payroll for yourself?

SE / Payroll tax by entity

Sole Prop / LLC

SE tax on 100% of net

S-Corp Election

Payroll tax on W-2 only

You Save

Annual savings

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Reasonable comp (60% of net): $0. Distributions (40%, no SE tax): $0

Have us file your S-Corp election (Form 2553) →

Estimates only. 60/40 split is a planning starting point. Real reasonable compensation must be defensible per industry, role, hours, and skills (IRC §1402(a)(2), §3121(a)). S-Corp adds payroll setup ($60-$100/mo), 1120-S return ($600-$1,500), state franchise fees. Break-even is generally $50K-$80K net. Have us run the real numbers. Phone 689-331-5723.