An S Corp tax calculator can assist you in estimating the amount of taxes you may owe if you choose to file as an S Corp. It simplifies the process of understanding and comparing your tax obligations under different business structures. The S Corp tax calculator is also an S Corp vs. LLC tax calculator. It can help you compare the potential tax savings between filing as LLC vs. S Corp. By using this tool, you can get an idea of how much you might owe in taxes and see how the tax benefits of an S Corp compare to those of an LLC.
Your Simplified S Corp Taxes Calculator
Estimate your business taxes as an S Corp and Sole-proprietorship.
What is an S Corp Tax Calculator?
An S-Corporation tax calculator helps you estimate your taxes if you file your business taxes as an S corp vs. Sole-proprietorship. Self-employed individuals such as 1099 recipients, independent contractors, and freelancers often file taxes as sole-proprietorship together with personal tax return under Schedule C. Single-member LLC owners may file taxes as sole-prop or s corp. Tax calculation can be complex, but understanding key tax terms is essential when using an S-Corp taxes calculator.
Types of Taxes
Three main types of taxes are income tax, self-employment tax, and payroll tax. You pay income tax on your earnings. It applies to individuals and businesses. Self-employment tax is added to the income tax that self-employed individuals pay to cover Social Security and Medicare. Sole proprietor business owners are subject to self-employment tax. However, the payroll is paid by employers and employees to fund Social Security and Medicare.
Entity Types
The main entity types are sole proprietorship, LLC, S corp, and C corp. Each has different tax implications and legal structures. S-Corps are a popular choice as they allow pass-through taxation, meaning income passes through to shareholders and is taxed at the individual level.
Pass-Through Tax vs. Double Taxation
Pass-through taxation is when business income passes to the owners, and they pay taxes at their individual rates. This applies to S-Corps and certain other entities. In contrast, double taxation occurs when a C corp pays corporate income tax, and then shareholders pay taxes for dividends they received from the corporation.
S Corp tax calculator: Paying taxes by entity type
Tax Brackets
Individual income tax brackets determine the rate at which income is taxed. Tax rates increase as income increases, but only the portion of income within each bracket is taxed at the corresponding rate. There are different brackets for single filers, married individuals, and corporate tax rates for C corps. C corporation tax rate is currently flat, which is 21%.
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2023 Federal Income Tax Brackets and Rates for Single Filers, Married Couples Filing Jointly, and Heads of Households |
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| Tax Rate | For Single Filers | Married Filing Joint | Heads of Households |
| 10% | $0 to $11,000 | $0 to $22,000 | $0 to $15,700 |
| 12% | $11,000 to $44,725 | $22,000 to $89,450 | $15,700 to $59,850 |
| 22% | $44,725 to $95,375 | $89,450 to $190,750 | $59,850 to $95,350 |
| 24% | $95,375 to $182,100 | $190,750 to $364,200 | $95,350 to $182,100 |
| 32% | $182,100 to $231,250 | $364,200 to $462,500 | $182,100 to $231,250 |
| 35% | $231,250 to $578,125 | $462,500 to $693,750 | $231,250 to $578,100 |
| 37% | $578,125 or more | $693,750 or more | $578,100 or more |
| Source: Internal Revenue Service. | |||
2023 Federal Income Tax Brackets and Rates for Single Filers, Married Couples Filing Jointly, and Heads of Households |
|||
| Tax Rate | For Single Filers | Married Filing Joint | Heads of Households |
| 10% | $0 to $11,000 | $0 to $22,000 | $0 to $15,700 |
| 12% | $11,000 to $44,725 | $22,000 to $89,450 | $15,700 to $59,850 |
| 22% | $44,725 to $95,375 | $89,450 to $190,750 | $59,850 to $95,350 |
| 24% | $95,375 to $182,100 | $190,750 to $364,200 | $95,350 to $182,100 |
| 32% | $182,100 to $231,250 | $364,200 to $462,500 | $182,100 to $231,250 |
| 35% | $231,250 to $578,125 | $462,500 to $693,750 | $231,250 to $578,100 |
| 37% | $578,125 or more | $693,750 or more | $578,100 or more |
| Source: Internal Revenue Service. | |||
S Corp vs. LLC Tax Calculator
An S Corp vs. LLC tax calculator is a helpful tool for comparing the tax implications of these business structures. In an LLC, the owner pays income tax and 15.3% self-employment tax on the business income, while an S Corp owner pays themselves a salary and distribution. The compensation is subject to payroll taxes, and can distribute the remaining income as dividends. Using the calculator, you can assess the potential tax savings of a Single Member LLC owner electing S Corp treatment, as it allows for reduced self-employment taxes. However, it’s important to meet the requirements of maintaining payroll records, paying a reasonable salary, and complying with IRS and state guidelines to enjoy the benefits of S Corp taxation. Utilizing a tax calculator helps simplify the process of understanding and comparing the tax implications of S Corps and LLCs, aiding in informed decision-making for your business.
Income Tax
In a Sole Proprietorship business, the LLC owner pays taxes at individual rates on business income reported on their personal tax return. S Corps file their own tax return, and the owners pay income taxes on their portion of the income at individual rates.
Self-Employment Tax
LLC filing taxes as Sole Proprietor business return pays self-employment tax on all business income. S Corp owners pay self-employment tax, which is called payroll tax, only on their reasonable compensation, not on dividends or distributions.
Payroll Tax
Single-member LLC owners usually don’t receive a salary from their business. However, S Corp owners who receive salary pay payroll taxes. S Corp owners can save on self-employment tax by paying it only for reasonable compensation.
Reasonable Compensation
S Corp owners must pay themselves a reasonable salary subject to income and payroll taxes. Sole Proprietors don’t have this requirement.
Estimate your tax-savings
Single-member LLC owners and sole-proprietor business owners, including independent contractors and 1099 recipients, can save on taxes if they transfer their business structure to S-corp.
Using the free tax planning tool below, estimate your potential tax savings with an S Corporation (S Corp).
This tax planning tool is more accurate and covers more details than the S Corp tax calculator. Tax planning tool includes the business structure and additional deductions you may qualify for.
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