Maximize Your Tax Savings
Discover the Benefits of Transitioning from LLC to S-Corp
Use our calculator to determine if switching your business structure can lead to significant tax savings. Understand the potential advantages and make informed decisions with Solvera.
Simple Steps to Calculate Your Tax Benefits
1
Enter Your Business Details
2
Review Your Current Tax Situation
3
Analyze Potential Savings
Tax Comparison: LLC vs S-Corporation
Schedule C (LLC)
S-Corporation
Annual Tax Savings with S-Corporation
How We Did The Math
LLC (Schedule C) Tax Calculation
Self-Employment Tax Calculation:
Additional LLC Costs:
Income Tax Calculation:
Final Tax Summary:
S-Corp Tax Calculation
Payroll Tax Calculation:
Unemployment Tax Calculation:
Additional S-Corporation Costs:
Income Tax Calculation:
Final Tax Summary:
Important Notes:
- This calculator provides estimates based on 2024 tax rates and simplified calculations.
- Self-Employment tax (15.3%) consists of Social Security (12.4%) and Medicare (2.9%).
- For LLC, Self-Employment tax applies to 92.35% of net profit due to deductibility of 50% of SE tax.
- For S-Corp, Self-Employment tax only applies to salary, not distributions.
- State tax rates are simplified and may not reflect all deductions or credits.
- Unemployment tax rates may vary by state and your company's history.
- S-Corporation costs are typically higher due to additional payroll and compliance requirements.
- Actual service costs may vary based on your location and service provider.
- Please consult with us for a detailed analysis of your specific situation.
Common Questions About LLC to S-Corp Transition
What are the tax benefits of converting from an LLC to an S-Corp?
Transitioning to an S-Corp can potentially reduce self-employment taxes, as only the salary paid to the owner is subject to these taxes, while remaining profits are distributed as dividends.
How does the conversion process from LLC to S-Corp work?
The process involves filing IRS Form 2553 to elect S-Corp status, ensuring compliance with state regulations, and possibly amending your operating agreement.
Are there any disadvantages to becoming an S-Corp?
While there are tax benefits, S-Corps have stricter operational processes, such as mandatory payroll for owners and limits on the number of shareholders.
Can I still operate as a single-member S-Corp?
Yes, you can operate as a single-member S-Corp, but you must adhere to specific IRS requirements, including paying yourself a reasonable salary.
What are the eligibility requirements for S-Corp status?
Your business must be a domestic corporation, have no more than 100 shareholders, and only issue one class of stock to qualify for S-Corp status.
Ready to Optimize Your Business Structure?
Contact us for a personalized consultation to explore how transitioning to an S-Corp can benefit your business. Our experts at Solvera are here to guide you every step of the way.