Compare a Sole Proprietorship / Single-Member LLC (Schedule C / 1099-NEC) against an S-Corporation (Form 1120-S) for the 2026 tax year. Optimize your Officer W-2 Reasonable Salary to balance 15.3% FICA / Self-Employment tax savings against the permanent 23% Section 199A Qualified Business Income (QBI) deduction enacted under Public Law 119-21 (OBBBA), and generate your signed IRS Reasonable Compensation Corporate Minutes PDF.
| 2026 Tax Rule | Sole Prop / 1099 LLC (Schedule C) | S-Corporation (Form 1120-S) | C-Corporation (Form 1120) |
|---|---|---|---|
| 15.3% FICA / Self-Employment Tax | Paid on 92.35% of entire net profit | Paid only on W-2 Reasonable Salary; K-1 distributions are FICA-free | Paid on W-2 salary; dividends subject to double taxation |
| 2026 Section 199A QBI Deduction | Up to 23% of net Schedule C profit | Up to 23% of Form 1120-S K-1 profit (W-2 wages unlock SSTB & high-income caps) | Not eligible for Section 199A QBI deduction (21% flat corporate rate) |
| Home Office & Mileage Deduction | Claimed on Schedule C & Form 8829 | Must use an IRC § 62(c) Accountable Plan reimbursement voucher | Must use an IRC § 62(c) Accountable Plan |
| 2026 Auto Loan Interest (Form 1098-VLI) vs. Section 179 | Business % on Schedule C or personal 1098-VLI | 100% Bonus Depreciation / Sec. 179 on Heavy SUVs (>6,000 lbs) or Accountable Plan mileage | Corporate Section 179 / Bonus Depreciation |
Model W-2 Officer Compensation vs. K-1 Distributions, verify IRS audit risk ratios, and print your Form 1120-S Reasonable Compensation Board Resolution PDF.
S-Corp owners cannot file Form 8829. Generate your corporate Accountable Plan Policy and monthly Home Office + 70¢/mile Reimbursement Voucher PDF.
Compare writing off a >6,000 lb GVWR SUV/Truck inside your S-Corp vs. claiming the $10,000 Form 1098-VLI deduction on Schedule 1-A + 70¢/mi reimbursements.