Tax Savings
If you are operating as a sole proprietor, you will be required to pay self-employment tax on your profit, currently at 15.3%.
If you set up a corporation for your business, only the salary you pay yourself is subject to self-employment tax. Depending on your situation, you may be able to save as much as 50% on your tax bill. Another tax benefit of forming a corporation is that select medical and childcare costs may be deductible, which cannot be deducted as a sole proprietor.
Self-Employment Tax Savings Calculator: Our calculator can help you figure out potential tax savings as an S-corporation.
