Corporation vs Sole Proprietor Tax Break-even Simulator
Enter annual revenue, expenses, and owner withdrawal to compare effective tax rates and find the revenue at which incorporating becomes favorable.
๐ฅ Inputs
It may be time to consider incorporating
At your current revenue and withdrawal structure, the corporation's tax burden is lower. Operating costs (e.g., accounting fees) are separate.
Tax saved by incorporating: 2,088๋ง์
๐งโ๐ผ Sole proprietor
Income tax + local income tax
4,077๋ง์
Effective rate 27.2%
๐ข Corporation
Corp tax + salary tax + dividend tax
1,989๋ง์
Effective rate 13.3%
Total tax comparison
Corporation tax breakdown
- Corporate tax1,320๋ง์
- Owner salary income tax196๋ง์
- Dividend tax473๋ง์
- โ ๏ธ Dividend over 20M KRW โ comprehensive taxation applied
๐ Incorporation break-even revenue
6,724๋ง์
Assuming the current expense ratio, withdrawal ratio, and dividend share. Above this revenue, the corporation becomes favorable.
Tax-rate data sources
- ๐ข Corporate tax (2026): โค200M 10% / 200Mโ20B 20% / 20Bโ300B 22% / >300B 25% โ Corporate Tax Act ยง55
- ๐งโ๐ผ Income tax: 8-bracket 6โ45% progressive โ Income Tax Act ยง55
- ๐ธ Dividend tax: 15.4% separate; comprehensive taxation above 20M KRW financial income โ Income Tax Act ยง14/ยง17
- ๐๏ธ Local income tax: 10% of corporate/income tax โ Local Tax Act
Verified 2026-06-20 ยท Source: National Tax Service, Korean Law Information Center
โป A reference estimate; personal/tax credits, health insurance, and corporate operating costs are simplified or excluded.
โ These results are reference estimates, not professional tax advice. Confirm with a tax accountant or the NTS call center (126) before filing.
โก Verify exact amounts and incorporation trade-offs via Hometax (hometax.go.kr) and a tax professional.