Tax Saving Calculator
NOTE: This calculator is only for sole proprietors and LLCs (not filing as S Corp). Also, this calculator is just an estimation of tax savings based on your net income from last year. Since this changes from year to year, your actual tax savings may be different.
This calculator is based on last year's numbers
Schedule a free call to see what this year's numbers say about your potential tax savings!
Guide to Get This Tax Savings
1. Convert to an S Corp
Starting out as a sole proprietor or LLC is a great way to dip your toes in the water of business ownership. You get to see if you will enjoy owning your business and if you can make money.
But once you start making money, you can quickly get a heap of tax placed on any profit you make. There's income tax and self employment tax.
Luckily, converting to an S Corp starts you on a path to lowering your self employment tax!
2. Put Yourself on Payroll
Putting yourself on payroll isn't even an option as a business owner until you convert to an S Corp - it's simply not allowed as a sole proprietor or LLC!
But as an S Corp, you can pay yourself a reasonable compensation on payroll (this will have self employment tax on it) AND also take profit distributions (this does NOT have self employment tax on it)!
The problem with payroll is, it can be a field of land mines if you don't know what you're doing. You can easily mess up filings and miss certain payments. I would always recommend having a professional help you with payroll!
3. Compliant Bookkeeping
Bookkeeping for a sole proprietor or LLC can be quite a bit different than bookkeeping for an S Corp. Honestly, it's a matter of what you don't know, you don't know!
I do not recommend trying to DIY the bookkeeping for your S Corp!
4. State & Federal Compliance
As an S Corp, you will have different rules for compliance and these vary from state to state. You will likely have some form of tax for being a corporation, be required to file annual reports, and be required to file a corporate return separate from your personal 1040 tax return.
Know what your state and federal government require so you stay in their good graces :)
❕❕Important Note: Just because the calculator showed you could save money, doesn't mean your business should necessarily be an S Corp. It's important to talk to a tax professional first!❕❕