- LLC vs. S-Corp Calculator: The $80,000 Profit Tipping Point
- The 15.3% Problem
- The S-Corp Advantage
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. Distributions (K-1): Exempt from 15.3% FICA tax.
### The Math at $100k Profit
If you elect S-Corp status and pay yourself a "Reasonable Salary" of $60,000:
- You pay 15.3% tax on the $60,000 salary ($9,180).
- You pay **0%** SE tax on the remaining $40,000 distribution.
- **Total Savings:** ~$6,120 per year.
The Calculator: Is It Worth It?
If your business is trending toward six figures, staying as a simple LLC is effectively giving the IRS a "tip" they don't deserve.
- **Net Profit < $60k:** Stay an LLC.
- **Net Profit $60k-$80k:** Grey zone. Start planning.
- **Net Profit > $80k:** **Mandatory S-Corp territory.**
Ready to stop tipping the IRS? We can run a custom projection for your business to show you exactly how much an S-Corp election would save you in 2026.
About the Author
Jason Astwood, Fractional CFO & Tax Strategist
As an IRS Enrolled Agent* and Financial Services Certified Professional®, Jason is a trusted authority in taxation, financial strategy, and business growth. He is the author of The S-Corp Playbook and the Director of Union National Tax, bringing over two decades of expertise in proactive tax planning, financial management, and compliance. Jason specializes in helping business owners minimize tax liability, optimize cash flow, and build long-term financial success. His combined expertise as a tax strategist, financial advisor, and Fractional CFO empowers entrepreneurs to scale their businesses with confidence.