LLC vs S-Corp Tax 2027 Calculator

Compare LLC vs S-Corp election tax 2027 — S-Corp saves self-employment tax on distributions but adds payroll complexity. Break-even around $40-60k profit.

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LLC Tax (Default)

Single-member LLC: disregarded, taxes on personal 1040. Multi-member: partnership Form 1065. Self-employment tax on ALL profit (15.3% up to SS wage base).

S-Corp Election

File Form 2553. Pay yourself reasonable salary (W-2). Take REST as distribution. Distribution NOT subject to self-employment tax. Saves 15.3% on distribution portion.

Reasonable Salary Requirement

IRS requires 'reasonable' salary — what similar role would pay in your industry. Too low = audit trigger. Use Bureau of Labor Statistics for benchmarks.

Costs

S-Corp requires: separate payroll (Gusto $40/mo + accountant), Form 1120-S annually, quarterly payroll taxes, state corporate fees. Adds ~$1,500-2,500/yr.

Source: irs.gov Form 2553 S-Corp election, sba.gov business structure guide. Last updated: May 2026.