How to Calculate S Corporation

What is S Corporation?

An S-Corporation payroll and distribution calculator helps determine the optimal salary-to-distribution split for S-Corp shareholders. The IRS requires a "reasonable salary" subject to payroll taxes; distributions above salary avoid self-employment tax. At $200,000 profit, a $80,000 salary + $120,000 distribution saves ~$15,000 in self-employment taxes.

Step-by-Step Guide

1. 1Elect S-corp status
2. 2Set reasonable salary
3. 3Take distributions
4. 4File Form 2553

Worked Examples

Common Mistakes to Avoid

• ✕Not verifying results
• ✕Ignoring jurisdiction

Frequently Asked Questions