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Short answer: at around $140k of net profit, an S-Corp election can save you real money on self-employment tax - but only if you are willing to run actual payroll and the savings clear the added cost and paperwork. How the saving works: as a sole proprietor or single-member LLC, essentially all of your net profit is subject to ~15.3% self-employment tax (up to the Social Security wage base). As an S-Corp, you split the money into a "reasonable" salary (subject to payroll taxes) and the remainder as a distribution (not subject to self-employment tax). If a reasonable salary for your role is, say, $80k, only that portion carries payroll tax - the roughly $60k distribution does not. That can be on the order of $9k of potential SE-tax savings, before costs. What "reasonable compensation" means: this is where most people get into trouble. The IRS expects the salary to reflect what you would pay someone else to do your job. Set it artificially low to dodge payroll tax and you are exposed on audit. It should be defensible with comparable-wage data for your role and industry. What you would actually have to do: (1) file Form 2553 to elect S-Corp treatment - generally within 2 months and 15 days of the start of the tax year you want it to apply, though late-election relief exists; (2) run real payroll with withholding and quarterly filings (a payroll provider handles most of this); (3) file a separate 1120-S return each year. Budget for payroll and tax-prep costs and weigh them against the SE-tax saving. For your numbers the election likely pencils out, but the reasonable-salary figure is the whole ballgame, and it is worth pinning down before you file.