How is Social Security (OASDI) handled?

OASDI is capped at the wage base entered (e.g., $170,000). Only wages are subject to OASDI; it does not apply to S-Corp distributions or C-Corp dividends.

How do state corporate taxes factor into C-Corp?

Use the state corporate tax rate input to include your state’s C-Corp tax. The C-Corporation column summarizes the combined corporate layer.

Does NIIT (3.8%) apply here?

For C-Corps, you can toggle applying NIIT 3.8% on dividends. The planner excludes NIIT on pass-through by design.

What do I get in the download?

A PDF and spreadsheet of the full Entity Matrix: assumptions, scenario pros/cons, a reasonable-compensation checklist, and advisor notes.

Entity Structure Matrix for $1M–$10M

Name: How to Structure Your $1M+ Business (and Stop Losing Six Figures in Taxes)
Uploaded: 2025-10-17T00:00:00Z
Duration: 3 min 57 s
Description: If your business is past $1M in revenue, your entity structure could be costing you $50K–$100K+ every year. Learn when to upgrade to an S-Corp or C-Corp and how to fix it.

Compare S‑Corp, C‑Corp, and Partnership using an apples‑to‑apples model of payroll/SE layers, corporate tax, and shareholder dividends. Use this to frame your strategy session.

Sole Prop / Partnership

$29,808

S‑Corporation

$13,770

C‑Corporation

$79,702

Business

Annual profit (before owner W‑2)

Owner W‑2 (reasonable comp)

Filing statusHousehold W‑2 wages (other than above)

Household wages reduce the remaining threshold before Additional Medicare applies.

Thresholds

OASDI wage base (editable)

Additional Medicare threshold: $200,000

Update the wage base annually when the IRS publishes the new amount.

C‑Corp assumptions

State corporate tax rate

Example: 1 = 1%% of after-tax profits distributed

% of after-tax profits distributed

Apply NIIT 3.8% on dividends

Sole Prop / Partnership

SE earnings (92.35% of profit): $277,050

OASDI (12.4%, capped)$21,080

Medicare (2.9%, uncapped)$8,034

Additional Medicare (0.9%)$693

Total considered

$29,808

S-Corporation

Employer FICA$6,885

Employee FICA + Addl Med$6,885

Employee Additional Medicare uses the remaining threshold after household wages.

Total considered

$13,770

C-Corporation

Corp tax (21% + state)$44,100

W-2 FICA (combined)$13,770

Shareholder tax on dividends$21,832

Total considered

$79,702

S‑Corp vs. Sole Prop

$16,038

Payroll/SE angle only; excludes income tax & §199A.

C‑Corp vs. Sole Prop

-$49,895

Includes corp tax + FICA + dividends under your assumptions.

Quick notes:

Only **OASDI** is capped at the wage base; **Medicare is uncapped**.
Additional Medicare (0.9%) applied using **remaining threshold after household wages**.
Planner excludes full individual income tax, §199A/QBI limits, NIIT on pass‑through, FUTA/SUTA, and local payroll taxes.

Get the full matrix (PDF + spreadsheet)

Includes assumptions, pros/cons by scenario, and a documentation checklist for S-Corp reasonable compensation.

Common questions

Short answers based on how the planner actually models payroll layers, NIIT, and state corporate tax.

OASDI (12.4% split employer/employee) is capped at the wage base you enter (e.g., $170,000). Only wages are subject to OASDI; it doesn’t apply to S-Corp distributions or C-Corp dividends.

The 0.9% Additional Medicare applies to wages above the remaining threshold after household W-2 wages. The tool shows a $200,000 default threshold for Single (and higher thresholds for MFJ).

Generally no. Owner-employees must take reasonable W-2 compensation (subject to payroll taxes). Distributions above reasonable comp are typically not subject to SE tax.

Use the state corporate tax rate input to include your state’s C-Corp tax. The card summarizes the combined corporate layer in the C-Corporation column.

For C-Corps, you can toggle “Apply NIIT 3.8% on dividends.” The planner excludes NIIT on pass-through by design (see notes).

The quick planner excludes full individual income tax, 199A/QBI limits, NIIT on pass-through, FUTA/SUTA, and local payroll taxes (see the notes box below the comparison).

A PDF and spreadsheet of the full Entity Matrix: assumptions, pros/cons by scenario, a reasonable-compensation checklist, and advisor notes.

Yes. The calculator and downloadable materials are free.

The “$1M+ Structure” Quick Take

If your business is past $1M in revenue, your entity structure could be costing you $50K–$100K+ every year. Learn when to upgrade to an S-Corp or C-Corp and how to fix it.

Read the full blog post

Editorial review

Reviewed for tax accuracy

Educational tax content prepared by HavenStone Advisory and reviewed for technical accuracy. It is not individualized tax, legal, accounting, investment, or financial advice. Rules can change, and your facts matter, so confirm decisions with your CPA, attorney, or tax advisor before acting.

Reviewed by Mia Anne Pham Reeves, CPA

See our editorial policy or report a correction.

Verify reviewer CPA license through TSBPA

Primary references

Review standard

Primary-source references checked where rule-specific claims are made.
Article scope limited to educational information unless a client engagement exists.
Time-sensitive tax rules labeled with published, updated, or reviewed dates.

Continue planning

How to Structure a $1M+ Business

Read the companion article on entity choice, owner pay, and common structure mistakes.

Tax Playbook Estimator

Map entity decisions into quarterly estimates, owner pay, and deadline planning.

Business Tax Strategy

Validate entity changes with CPA-led planning before making elections.

Turn your entity model into a tax plan

Bring your numbers and get a focused, CPA-led session to choose S-Corp vs C-Corp vs LLC, set a defensible owner salary, align payroll/SE tax and dividends, and leave with a clear 12-month implementation checklist.