Free planning tool · California
Is an S-corp worth a conversation?
Forget the $100K rule. The number that decides this is the gap between your profit and what your own work is actually worth. Two inputs, one honest answer, and nothing you enter leaves your browser.
S-corp election screener
Run the screen on your own numbers.
This is the same screen we walk through in our article on the $100K rule: 15.3% self-employment tax on 92.35% of profit, against payroll taxes on a defensible salary, with the 2026 Social Security wage base applied. The $10,000 bar is our planning threshold, not an IRS number.
Your rough estimate of a market wage for the work you personally do - the starting point for what the IRS calls reasonable compensation. Split your week honestly: admin, sales, management, and the work you actually sell.
Worth a serious conversation
- Self-employment tax without the election
- $25,433
- Payroll taxes on a $100,000 salary
- $15,300
- Estimated federal payroll-tax gap
- $10,133
- California S-corp franchise tax (context, not netted)
- −$1,200
The estimated gap clears our screening bar. That does not make the election automatic - the salary figure has to hold up to documentation, and the downstream effects still need weighing - but on these numbers the conversation is worth having.
The number this screen cannot give you is the salary itself. A defensible figure needs documentation - your hours, your role, market wage data - and a documented reasonable-compensation analysis is part of our tax planning engagement. For a fuller comparison on your own numbers first, the Entity Clarity Calculator prices sole proprietorship, S-corp, and C-corp side by side.
What this screen leaves out
It is a screen, not a tax calculation. It ignores the deduction for the employer half of payroll taxes, the cost of a payroll service, unemployment and state payroll taxes, the effect on the Section 199A deduction, and how the change ripples into your income tax return. California's 1.5% franchise tax ($800 minimum) is shown for context rather than netted into the verdict, and the salary you enter is your own estimate - the screen is only as good as that figure.
Rates verified against IRS Publication 15 and the California FTB. Educational estimates only, not tax, legal, or accounting advice.
The screen is free. The salary number is the work.
A documented reasonable-compensation analysis - your hours, your role, market wage data, and a figure that holds up - is part of our tax planning engagement. Book a discovery call and we will tell you honestly whether the election earns its keep in your situation.
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