S-Corp owners can split their income between a W-2 salary and shareholder distributions. Only the salary portion is subject to self-employment tax (15.3%). The IRS requires the salary to be "reasonable compensation" for your role, typically $40,000 to $80,000 for most small business owners. The distribution portion avoids payroll taxes, which is the primary tax advantage of the S-Corp election.
Salary vs Distribution Calculator for Bar / Brewery
Pre-filled with real bar / brewery industry benchmarks
Salary vs Distribution Calculator
Pre-filled with bar / brewery industry defaults. Edit any field to use your real numbers.
LLC (Pass-Through)
SE Tax: $28,059
Income Tax: $40,346
Total: $68,405
S-Corp
FICA on Salary: $11,224
Income Tax: $40,346
Total: $51,570
Potential S-Corp Savings: $16,835/year
Current structure: LLC | Total comp: $183,392