LLC vs S-Corp vs C-Corp: California Tax Comparison
Compare your total tax burden across all four entity structures — including the California LLC gross receipts fee that most comparison tools miss. Models federal income tax, state income tax, self-employment tax, FICA, corporate tax, franchise tax, and the QBI deduction.
California-specific calculations based on 2024 tax rates. Built by a CPA with 30+ years advising on entity structure.
Total revenue before expenses. Needed to calculate California's LLC gross receipts fee — the hidden cost most comparison tools miss.
Revenue minus all business expenses, before you pay yourself.
What the IRS considers a fair salary for your role. Too low triggers audits. Too high negates the S-Corp benefit. Learn more
SSTBs face phase-out of the QBI deduction above $191K.
Frequently Asked Questions
When should I switch from an LLC to an S-Corp in California?
The general threshold is $60K–$80K in net business income, but it depends on your specific situation. At that income level, the FICA savings from splitting income between salary and distributions typically outweigh the added payroll complexity and California's $800 franchise tax minimum + 1.5% S-Corp minimum tax. Use this calculator to model your exact numbers.
What is California's LLC gross receipts fee and why does it matter?
California charges LLCs an annual fee based on total gross revenue (not net income): $900 for $250K–$500K, $2,500 for $500K–$1M, $6,000 for $1M–$5M, and $11,790 for $5M+. This is on top of the $800 franchise tax. Most online LLC vs S-Corp comparison tools don't include this fee, which can make the LLC significantly more expensive than the analysis suggests.
Can I have an S-Corp and still get the QBI deduction?
Yes. S-Corp owners can claim the Section 199A QBI deduction on the distribution portion of their income (not the salary portion). This is actually an advantage of the S-Corp structure — the salary reduces FICA, and the distribution qualifies for up to a 20% deduction. For specified service trades (law, accounting, consulting, health), the deduction phases out above $191,950 (single).
Why would anyone choose a C-Corp if it has double taxation?
Three main reasons: (1) Venture capital — investors require C-Corp structure for their fund agreements. (2) QSBS exclusion (Section 1202) — founders can exclude up to $10M in capital gains on qualified C-Corp stock held 5+ years. (3) The 21% flat corporate rate is useful for reinvesting profits. If you're bootstrapped and plan to take earnings out annually, C-Corp is almost always worse.
Not sure which structure is right for your business?
The 'best' entity structure depends on factors this calculator can't model — your exit timeline, investor requirements, state tax nexus, and personal financial situation. Dennis Duitch has structured hundreds of businesses across technology, entertainment, manufacturing, and professional services.
MBA, Northwestern University · CPA · Certified Business Appraiser · Mediator · 30+ years of practice
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