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 Dental Practice
Pre-filled with real dental practice industry benchmarks
Salary vs Distribution Calculator
Pre-filled with dental practice industry defaults. Edit any field to use your real numbers.
LLC (Pass-Through)
SE Tax: $44,431
Income Tax: $63,888
Total: $108,319
S-Corp
FICA on Salary: $17,772
Income Tax: $63,888
Total: $81,660
Potential S-Corp Savings: $26,659/year
Current structure: S-Corp | Total comp: $290,400