Most tax professionals recommend S-Corp election when your net business profit consistently exceeds $50,000–$60,000 per year. Below that threshold, the cost of running payroll (typically $900–$1,800/year) and filing an additional corporate tax return (Form 1120-S, typically $800–$2,000 with a CPA) tends to erase the savings from reduced self-employment taxes.
At higher income levels — $100,000, $150,000, $200,003 — the annual savings grow significantly, making S-Corp election increasingly worthwhile. Use our calculator to see exact estimates based on your numbers.