Self-employed

Split your pay and cut self-employment tax.

Once your business profit is solid, electing to be taxed as an S-corp can save real money by reducing the self-employment tax you pay on part of your income.

Watch the quick version

See how it works through one simple example.

Is this you?

Your business profit is consistently in the higher five figures or more.
Below that, the extra payroll and admin cost may outweigh the savings.

Here is the idea, in plain words

You pay yourself a reasonable salary, which is subject to payroll tax.

The rest comes out as distributions, which are not subject to self-employment tax.

The gap is where the savings come from.

What this could be worth

Worth saving self-employment tax on the distribution portion of your profit, once profit is high enough.
  • 1Confirm your profit is high enough to justify it.
  • 2Set a reasonable salary for your role.
  • 3Run payroll and take the rest as distributions.

Educational guidance, not tax advice. We confirm every figure and your eligibility before you act.

Ready?

See if an S-corp pays off

Connect your numbers and we model the self-employment tax saved against the added cost.

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What to watch out for

The honest version.

  • The IRS requires a reasonable salary, not an artificially low one.
  • Payroll and extra filings add cost and admin.
  • It rarely helps below a certain profit level.

Common questions

When is it worth it?

Usually once profit is comfortably into the higher five figures.

What is a reasonable salary?

What you would pay someone else to do your job. We help benchmark it.

Is there more paperwork?

Yes, payroll and a separate return, which we factor in.

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