1. THE MECHANISM — Right now, all $135,000 of your net income is subject to self-employment tax. Under S-corp status, only your salary portion is subject to payroll tax; the remaining profit taken as a distribution avoids that tax entirely. The savings come specifically from the gap between $135,000 and whatever salary you land on. 2. SE TAX UNDER CURRENT STRUCTURE — At 92.35% of $135,000, that's $124,673. The Social Security portion (12.4%) caps out at the annual wage base, which your income exceeds, so that portion applies only up to the cap; the Medicare portion (2.9%, plus an additional 0.9% given your income level) applies to the full amount. Combined, this lands in the neighborhood of $14,500-$15,500 in total self-employment tax for the year — precise figure depends on the exact current-year wage base. 3. PAYROLL TAX UNDER S-CORP, USING $70,000 SALARY — Payroll tax applies to the salary figure directly (unlike self-employment tax, there's no 92.35% reduction step). On a $70,000 salary, combined employer-and-employee payroll tax (15.3% total, split evenly) comes to approximately $10,710, split as roughly $5,355 paid by the business (employer half) and $5,355 withheld from the salary (employee half) — both ultimately a cost to you as the owner of the business. The remaining $65,000 of profit (roughly, before accounting for the added costs below) would be taken as a distribution with no self-employment or payroll tax owed on it. Raw savings from the SE-tax-versus-payroll-tax split alone: roughly $14,500-$15,500 minus $10,710, or approximately $4,000-$5,000. 4. REASONABLE SALARY CHECK — $70,000, based on comparable in-house UX role pay, is a reasonable, defensible figure — this is exactly the kind of justification (market rate for comparable work) the IRS looks for, unlike an arbitrarily low number chosen mainly to maximize the distribution. Proceeding with this salary in the calculation. 5. ADDED COSTS OF S-CORP STATUS — Payroll processing through a service: roughly $600-$1,200/year depending on the provider and pay frequency. A separate S-corp return (Form 1120-S) with a paid preparer: commonly $800-$1,500 depending on complexity and region. Slightly more bookkeeping overhead to track salary versus distributions properly: a few hundred dollars a year if your existing bookkeeper absorbs this, more if it requires additional hours. State LLC-to-S-corp election itself has no separate Ohio filing fee beyond the federal Form 2553, though confirm this with your bookkeeper. Realistic total added-cost range: roughly $1,500-$3,000/year. 6. THE ACTUAL BREAKEVEN — Net result: approximately $4,000-$5,000 in raw tax savings, minus $1,500-$3,000 in added costs, leaves you with a net savings in the rough range of $1,500-$3,000/year. At $135,000 net income, you're comfortably above the commonly cited $60,000-$80,000 rough breakeven range, and your specific numbers confirm a real, if modest-to-moderate, net benefit rather than just an income-threshold rule of thumb. 7. STATE-SPECIFIC ADD-ONS — Ohio doesn't have a major S-corp-specific state tax comparable to some other states', so the federal-level math above is likely your primary consideration; still worth a direct confirmation with your bookkeeper on current Ohio LLC/S-corp filing requirements, since state rules do change. 8. VARIABLE INCOME FLAG — Your income is described as steady with ongoing retainers, so the cash-flow commitment of regular payroll shouldn't be a significant operational problem here. 9. RECOMMENDATION — Net savings, in the range of roughly $1,500-$3,000/year based on your numbers, using the $70,000 salary figure as given (confirmed reasonable). Given you're already comfortable with payroll services and have bookkeeping support in place, the operational lift is manageable relative to the benefit. Worth a final confirmation with your CPA before filing Form 2553, particularly to lock in the exact current-year payroll tax figures and confirm Ohio has no additional S-corp-specific requirement you should know about.