How much does an S-corp election realistically save on a $120,000 profit?

With a sole proprietorship or default LLC, all $120,000 of net profit is hit by 15.3% self-employment tax (Social Security up to the annual wage base plus Medicare), roughly $16,000 to $17,000 before the deduction for half. With an S-corp, only your W-2 'reasonable salary' is subject to that tax; distributions above it escape payroll tax. Pay yourself, say, $70,000 and take $50,000 as distribution, and you avoid the roughly 15.3% on that $50,000, saving around $7,000 to $7,600. Subtract payroll processing, extra tax prep for Form 1120-S, and possible state fees, often $1,500 to $3,000, and the net win is real but smaller than headline math suggests. Estimate your own numbers at wealthserene.com/tools/self-employed-hub.