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 Medical Practice
Pre-filled with real medical practice industry benchmarks
Salary vs Distribution Calculator
Pre-filled with medical practice industry defaults. Edit any field to use your real numbers.
LLC (Pass-Through)
SE Tax: $52,877
Income Tax: $76,032
Total: $128,909
S-Corp
FICA on Salary: $21,151
Income Tax: $76,032
Total: $97,183
Potential S-Corp Savings: $31,726/year
Current structure: S-Corp | Total comp: $345,600