If your LLC or sole proprietorship nets $50,000+ per year, you are almost certainly overpaying self-employment tax. S-Corp election is the most powerful legal tax strategy available to self-employed Americans.
As a single-member LLC, 100% of your net profit is subject to self-employment tax (15.3% on the first $160,200 in 2024). When you elect S-Corp status and pay yourself a reasonable salary, only the salary is subject to payroll taxes. Profits above the salary distributed as owner distributions are not subject to self-employment tax.
As LLC: ~$10,597 SE tax
As S-Corp (salary $45K): ~$6,358
Saves ~$4,239/year
As LLC: ~$14,130 SE tax
As S-Corp (salary $60K): ~$8,478
Saves ~$5,652/year
As LLC: ~$19,526 SE tax
As S-Corp (salary $75K): ~$10,597
Saves ~$8,929/year
Estimates based on 2024 rates. Actual savings depend on reasonable salary and state taxes. We run exact calculations for every client.
Tell us your situation. We show you exactly how much more you should be keeping.
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