No - the figures should not be added together. It is a comparison of the two options. My business - very similar to yours right now in that it is really just me - has $120K profit before compensating me. S-Corp vs. Sole Proprietor is a decision about how your business will compensate you with different tax and other cost implications depending on that choice. I did not address income tax at all aside from mentioning a deduction or two that would be lower if you went S-Corp vs. Sole-Proprietor.
So only looking at payroll taxes I have two choices:
Option 1:
Sole proprietor = $16,955 in Self-employment tax
Option 2:
I'm an S-Corp and pay myself $60K salary = $9,180 in FICA tax
Rather than entire $120K going into self-employment tax computation (15.3% of 92.35% of Schedule C net-profit at the level of income we're talking about here), I pay FICA based on a reasonable salary of $60,000 (15.3% of that salary). So that's basically the absolute most that the tax savings could be if I choose S-Corp. But an S-corp is more expensive in several ways, so the end of the day net savings is less than the initial figures would indicate.
How much less? Bare minimum I'd say is about $1,000 ($138 annual LLC registration fee, about $500 / year payroll software, about $250 in unemployment tax for yourself, bare-minimum $100 for tax-prep software).
SeattleCPA is the one who consistently advises hiring a good accountant - figure $3,000 minimum total cost if you go that route, maybe more. Pretty rare person who is in business in some area other than tax accounting and has the expertise to do this well on your own - most accountants actually aren't skilled enough in this area even, so if you hire, which odds are high that you should, you're really looking for a true expert. And that is not cheap.
So the S-Corp saves you on payroll taxes on yourself - and costs $1,000-3,000 at minimum. That is the hurdle that your payroll tax savings have clear for this to be worth it. Actually need to clear that hurdle with significant room because doing all this work for just $100 a year would not be worth it - even if you hire an accountant you still have some additional work both up-front and every year for yourself as well. You need to be able to pay extra expenses, which likely includes hiring an expert CPA, and also have a few thousand left over for yourself for it to be worth the effort.
Point of clarity - if you do go S-Corp you will have at least one employee - yourself. Employees other than yourself or your spouse should cost you the same regardless of this decision to be taxed as an S-Corp vs. not.
Crunching the numbers is exactly how you decide something like this. To really do it well you're preparing multiple draft tax returns under various scenarios to see how they compare. With only $50-60K in revenue, it seems unlikely to me that the S-Corp juice is worth the squeeze for you, but until you (or someone you hire) run the numbers in a fairly detailed way you're not going to know for sure.
