LLC vs. S-Corp Calculator: The $80,000 Profit Tipping Point
When is an LLC no longer the best option for your business? For most entrepreneurs, the "Tipping Point" happens at $80,000 in net profit.
Below $80,000, the administrative costs of running an S-Corp (payroll, separate tax filings, bookkeeping) often outweigh the tax savings. But once you cross that $80k threshold, the math changes drastically.
The 15.3% Problem
As a single-member LLC, you pay 15.3% Self-Employment Tax on 100% of your profit.
- Profit: $100,000
- SE Tax: ~$15,300
- Plus Income Tax
The S-Corp Advantage
An S-Corp allows you to split your income into two buckets:
1. Salary (W-2): Subject to 15.3% FICA tax.
2. from 15.3% FICA tax.
