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Planning & decision tool
Entity-selection helper
How your business is taxed changes how much you keep. Enter one year of profit and this runs it through three structures side by side, a sole proprietor or single-member LLC, an S-corp, and a C-corp, showing the total federal tax under each and the difference between them, so you can see the tradeoff each choice carries.
Background reading: Business & side income
How to read this
This shows each structure estimated annual tax so you can see the tradeoff; it is not a recommendation. The right entity depends on liability, administration, your full situation, and legal advice.
Sole prop / SMLLC
Payroll / SE tax$31,606
Corporate tax$0
Dividend tax$0
QBI deduction$6,303
Income tax$60,519
Total tax$92,125
S-corp
Payroll / SE tax$22,950
Corporate tax$0
Dividend tax$0
QBI deduction$27,705
Income tax$54,766
Total tax$77,716
C-corp
Payroll / SE tax$0
Corporate tax$63,000
Dividend tax$35,550
QBI deduction$0
Income tax$0
Total tax$98,550
Where this goes next
Choosing an entity is a conversation with a CFP and a tax attorney.
Assumptions and simplifications
- A simplified comparison: self-employment tax uses the 92.35% base with half the Social Security and Medicare portion deducted; the QBI deduction is applied without the W-2 wage limit; the C-corp dividend is taxed at the long-term rate without NIIT; state tax is not modeled.
- The S-corp saving comes from paying payroll tax only on the salary, not the distribution; the salary must be reasonable, a constraint the tool shows but does not enforce.
- The C-corp path shows the double tax (corporate tax then a dividend) and excludes QBI; QSBS is a separate consideration for C-corp stock.
- Figures are estimates for comparison, not a filing-grade calculation.