How this LLC, S-Corp, and C-Corp tax comparison helps
Choosing how a business is taxed can change both its modeled annual tax cost and the cash that reaches its owner. This calculator applies the same annual business figures to three common U.S. treatments: an LLC or other pass-through setup, an S-Corp election, and a C-Corp. It is not a substitute for preparing three complete tax returns. Instead, it provides a consistent side-by-side estimate showing how revenue, deductions, owner salary, and distribution choices affect each treatment.
That comparison is useful because identical business profit can be taxed through very different paths. In the pass-through model, profit flows to the owner and the estimate applies income tax and simplified self-employment tax. In the S-Corp model, owner compensation is split between salary and remaining business profit, changing the payroll-tax base. In the C-Corp model, the company is taxed first and the owner can owe dividend tax when after-tax profit is paid out. Viewing those paths together is more informative than relying on a broad claim that one entity is always cheaper.
Use this LLC, S-Corp, and C-Corp comparison for planning, scenario testing, and more focused conversations with a CPA or tax attorney. Its flat rates and simplified assumptions are not filing guidance. Actual results can differ because tax law includes progressive brackets, wage bases, deductions, credits, state rules, and entity-level fees that are not fully represented here. The estimate can still identify which assumptions create the largest differences among the three tax treatments.
LLC, S-Corp, and C-Corp inputs, formulas, and result interpretation
Begin the entity-tax comparison with annual business figures. Enter gross revenue and the costs that reduce profit: cost of goods sold, operating expenses, depreciation or amortization, interest, and other deductions. The calculator subtracts those amounts to estimate business income. Using that same starting income for each treatment makes the LLC, S-Corp, and C-Corp results easier to compare.
Then choose the tax assumptions for your entity comparison. The federal-rate field is a flat modeling rate, not a progressive-bracket calculation. The state-rate field likewise serves as a general state income or corporate tax assumption. A blended rate can be useful when the purpose is to compare structures rather than prepare a return. Testing several rate assumptions can reveal whether the relative ranking of the entity choices is stable.
The entity-specific entries determine where the estimates diverge. For an S-Corp, owner salary is the amount subject to the model's payroll-tax calculation. Increasing salary generally increases modeled payroll tax, while reducing it can make the S-Corp result appear more favorable but may be less realistic. For a C-Corp, the distribution percentage determines how much after-tax corporate profit is paid as dividends in the current year. Profit retained in the company is not current cash received by the owner.
When reviewing the LLC, S-Corp, and C-Corp totals, consider owner receives as well as total tax cost. The owner-receives amount shows modeled cash paid to the owner after the applicable taxes in each case. A C-Corp may show a lower current owner payment when earnings are retained; that does not mean those retained funds have disappeared, but they remain in the company rather than becoming current personal cash.
The calculator uses annual dollar amounts and a deliberately simplified tax framework. Its central relationships are:
In this estimator, LLC business income receives the chosen federal and state rates plus simplified self-employment tax. The S-Corp estimate applies payroll tax to salary, applies the selected income-tax rates to total owner income, and adds the entered compliance cost. The C-Corp estimate applies corporate federal and state tax before calculating dividends, then applies dividend tax only to the distributed portion of remaining profit.
LLC, S-Corp, and C-Corp worked example and limitations
Suppose a single-owner business has $150,000 of gross revenue, $30,000 of cost of goods sold, $40,000 of operating expenses, and $10,000 of combined depreciation, interest, and other deductions. Estimated business income is $70,000. At a 24% federal rate and 6% state rate, the LLC scenario applies both selected income-tax rates and simplified self-employment tax to that $70,000. This gives the pass-through model a consistent baseline for comparing the alternatives.
For an S-Corp illustration, assume the owner takes a $45,000 salary. The model applies payroll tax to that salary and treats the remaining business income as the distribution amount. The selected federal and state income-tax assumptions still apply to total owner income. Because the payroll-tax base changes with salary, testing several defensible salary amounts is the most useful S-Corp sensitivity check on this page.
In the C-Corp version, federal corporate tax at 21% and the chosen state tax are deducted before the distribution calculation. The selected share of that after-tax amount is paid out, and the model applies 15% dividend tax to the payout. Lowering the distribution percentage leaves more after-tax value in the company and reduces current owner cash; paying it all out makes the dividend-tax effect visible.
This entity-tax calculator has important limits. It does not model progressive federal brackets, Social Security wage caps, additional Medicare tax, net investment income tax, the qualified business income deduction, retirement-plan contributions, health-insurance treatment, local taxes, franchise taxes, or special state entity fees. It also does not allocate income by the number of owners. Treat the output as a comparison framework, not a filing-ready answer.
For a more useful LLC, S-Corp, and C-Corp comparison, change one assumption at a time. Test a higher and lower S-Corp salary, then test different C-Corp distribution percentages. If the same treatment remains favored across reasonable assumptions, the direction may be more dependable. If a small change reverses the ranking, the entity decision is highly assumption-sensitive and merits detailed professional analysis.
Introduction: LLC, S-Corp, and C-Corp tax structures
Why entity choice matters: the same business profit can be taxed very differently when it passes through to an owner, is split between salary and distributions, or is taxed at the corporate level first.
This LLC, S-Corp, and C-Corp calculator distinguishes tax treatment from legal organization. Business owners often describe the choice as a choice among an LLC, S-Corp, and C-Corp, but the practical comparison frequently concerns how profit is taxed, how working-owner compensation is handled, and whether earnings are retained or paid out. This page focuses on those broad mechanics before more detailed advice from an advisor.
In the LLC pass-through model, business profit is estimated with the chosen federal rate, chosen state rate, and simplified 15.3% self-employment tax. That treatment makes the pass-through scenario straightforward to compare and helps explain why some profitable businesses explore S-Corp taxation.
An S-Corp is generally a tax election rather than a wholly separate day-to-day operating model. An LLC can elect S-Corp taxation. A working owner is expected to receive reasonable compensation as wages, while remaining profit may be distributed differently. The salary assumption is therefore one of the most consequential judgments in this comparison.
A C-Corp is taxed at the corporate level. Here, the corporation pays 21% federal tax and the selected state rate on business income, then after-tax profit may remain in the company or be distributed. Distributed profit receives the model's 15% dividend tax. The practical importance of this double-taxation pattern depends on whether the business pays out earnings or reinvests them.
No entity tax treatment is universally best. Administrative simplicity may support a pass-through setup even when its modeled tax is higher. An S-Corp election may deserve analysis when payroll-tax savings are meaningful and the business supports a defensible salary. A C-Corp can look different for a company retaining earnings for expansion than for one distributing nearly all profit. Entering your own figures makes those tradeoffs clearer than generic entity-choice advice.
How to use this LLC, S-Corp, and C-Corp tax calculator
- Enter annual Gross business revenue ($) before deductions.
- Add annual Cost of goods sold (COGS) ($) when it applies to the business.
- Enter annual Operating expenses ($) and the other listed deductions so the profit estimate reflects your scenario.
- Calculate the entity comparison, then test another salary, tax-rate, or distribution assumption before using the estimate in an LLC, S-Corp, or C-Corp decision.