Daykeeper logodaykeeper
Sign in

An S-corp saves $6,350 a year at $100k profit. If you can get one.

At $100,000 profit in 2026, an LLC owner pays $14,130 in self-employment tax, while an S-corp paying you a $40,000 salary pays $6,120 in payroll tax, so you keep about $6,350 after payroll and accountant costs. The catch is that an S-corp can't have an owner who's a nonresident alien, so start with your US tax status.

First, your US tax statusIt decides whether an S-corp is open to you. US citizens living abroad pick the first one.
Revenue minus costs, before paying yourself.
Your pick, as a % of profit. The IRS wants it reasonable for your work.
Gusto Simple for 1 person is $49 + $6 a month, so $660 a year.
For the S-corp return (Form 1120-S). $1,000 is our guess, so swap in your accountant's quote.

An S-corp saves you, per year

$6,350

Break-even: about $21,000 profit at a 40% salary.

LLC or sole prop

Social Security (12.4%)$11,451
Medicare (2.9%)$2,678
Total$14,130

S-corp, $40,000 salary

Payroll tax on salary$6,120
Payroll service$660
Extra accountant$1,000
Total$7,780

State fees and state income tax aren't included for other states.

Income tax isn't in this math, but the QBI deduction (up to 20% of business profit) is now permanent, and your S-corp salary doesn't count as QBI, so a higher salary shrinks it. Extra QBI limits start above $201,750 taxable income for single filers and $403,500 for married filing jointly in 2026.

This isn't tax advice. Check with an accountant before you file an S-corp election.

Your 2026 quarterly tax dates

  1. Q1: April 15, 2026
  2. Q2: June 15, 2026
  3. Q3: September 15, 2026
  4. Q4: January 15, 2027

To skip the underpayment penalty, pay at least 100% of last year's total tax across the four payments, or 110% if last year's AGI was over $150,000. Paying 90% of this year's tax works too.

Pay at least this each quarter

$5,000

100% of last year's tax, split into 4.

The $100,000 profit example

A single filer outside California makes $100,000 profit and would pay themselves a $40,000 salary (40%) as an S-corp.

  • As an LLC or sole prop: $14,130 self-employment tax ($11,451 Social Security + $2,678 Medicare)
  • As an S-corp: $6,120 payroll tax + $660 payroll service + $1,000 extra accountant = $7,780
  • S-corp saves: $6,350 a year
  • Break-even: about $21,000 profit at a 40% salary
  • Same business in California: the LLC pays $800 and the S-corp pays $829 to the state, so the S-corp saves $6,320

How we work it out

  • LLC or sole prop: self-employment tax = 12.4% × 92.35% of profit (up to $184,500) + 2.9% × 92.35% of profit + 0.9% over $200,000 single or $250,000 married filing jointly.
  • S-corp: payroll tax = 15.3% on your salary (employer and employee halves, Social Security capped at $184,500) + 0.9% on wages over the same thresholds. Distributions don't get payroll tax.
  • Savings = LLC self-employment tax − S-corp payroll tax − payroll service − extra accountant cost − any extra state tax.
  • California: an S-corp pays 1.5% of its profit after your salary, at least $800. An LLC pays $800, plus $900 to $11,790 once revenue passes $250,000.
  • Break-even = the lowest profit where savings go above $0, with your salary % and costs held the same.
  • Not included: income tax, other wages you or your spouse earn, state income tax, and the half of SE or payroll tax you deduct.

Sources, checked Oct 1, 2026

This isn't tax advice. Check with an accountant before you file an S-corp election.

Questions founders ask

Should I switch my LLC to an S-corp?

At $100,000 profit and a $40,000 salary, an S-corp saves about $6,350 a year in 2026 after $1,660 of payroll and accountant costs. Below roughly $21,000 profit, those costs eat the savings. Put your own salary and accountant quote in the calculator, because both move the answer a lot.

How much should I pay myself from my S-corp?

The IRS gives no fixed number or percentage. It wants a salary that's reasonable for the work you do, judged by things like your duties, your time and what similar businesses pay. If your salary is too low, the IRS can treat part of your distributions as wages and charge payroll tax on them.

Can a non-US resident own an S-corp?

No. The IRS doesn't allow nonresident aliens as S-corp shareholders. If you're on a visa and pass the green card test or the substantial presence test, you're a US resident for tax, and resident aliens can own S-corp shares.

How much is self-employment tax in 2026?

It's 15.3% on 92.35% of your profit: 12.4% for Social Security on up to $184,500, plus 2.9% for Medicare on all of it. Over $200,000 single or $250,000 married filing jointly, add 0.9%. On $100,000 profit, that's $14,130.

Is an LLC better than a sole proprietorship for taxes?

For federal tax, they're the same: a single-member LLC owned by one person files Schedule C and pays the same 15.3% self-employment tax as a sole proprietor. The tax only changes if the LLC elects to be an S-corp.

When are quarterly estimated taxes due in 2026?

April 15, June 15 and September 15, 2026, then January 15, 2027. To skip the penalty, pay at least 100% of last year's tax across the four, or 110% if last year's AGI was over $150,000.

Got customers asking questions? Answer them in one place.

Daykeeper gives your app a support chat widget and one inbox for every customer message. Free for 100 conversations a month. Your AI can set it up for you in one prompt.

Start free

More free tools

Stripe fee calculatorWhat Stripe, Paddle, Lemon Squeezy and Polar take from your MRR.SaaS metrics calculatorMRR, churn, NRR and LTV, each explained in one plain sentence.What's my SaaS worth?A price range from real 2025 and 2026 sales, plus your grade.