When to Switch to S-Corp: Saving Thousands on Self-Employment Tax

As a Sole Proprietor, you pay 15.3% Self-Employment Tax on every single dollar of profit. This covers Social Security and Medicare, and it’s likely your biggest tax burden.

By electing S-Corp status, you can split your income into 'Salary' and 'Distributions'. You only pay the 15.3% tax on your Salary, not your Distributions. This single structural change can save you $5,000 - $10,000+ per year once your revenue hits the $80k mark.

If you are earning consistent income above $80,000 annually, the administrative cost of an S-Corp is dwarfed by the tax savings. Our system analyzes your input and will explicitly prompt you with a 'Switch to S-Corp' proposal if the math works in your favor.