Free Resources & Tools
How much could you save with an S Corp?
Get a quick, illustrative estimate of your potential payroll-tax savings from electing S Corp status. For an exact number tailored to your business, book a free strategy call.
Your business
Why do I have to pay myself?
When you elect as an S Corp, the IRS requires you (the owner) to pay yourself a reasonable salary through a formal payroll process. Your reasonable salary is how you both pay into self-employment taxes and how you save.
How do the savings work?
Once you’re an S Corp, your profit is split into two buckets: a reasonable salary and owner distributions. Only your reasonable salary is subject to the 15.3% self-employment tax (sometimes called payroll tax) instead of your entire profit.
What’s considered “reasonable”?
The IRS does not have a formula for calculating a reasonable salary. The best starting point is what someone else would be paid for your services, adjusted for your business’s cash flow. Consider where you live, if you’re full-time or part-time, and your seniority in the role. Your reasonable salary is compensation for the actual service you provide, not the administrative work of being a business owner.
How should I choose my salary?
Determining your reasonable salary is based on facts and circumstances. At All-In Advisors, we’ll help you establish a range based on your business profit, factoring in where you live, if you’re full-time or part-time, and your seniority in the role. Look at what you would pay someone else to do your role, and keep a record of how you set your salary in case the IRS asks.
Estimated savings
Estimated annual savings on self-employment tax when you elect S Corp status with a reasonable salary.
This calculator is intended for illustrative purposes only and does not constitute tax advice. It estimates federal self-employment/payroll tax savings only and does not account for income tax, state taxes, additional S Corp administrative costs, or your specific circumstances. Book a call with All-In Advisors for an exact, personalized number.