Vibe Coder Taxes: What Happens When Your AI Side Project Starts Making Money

Your weekend Bolt.new project just hit $500 MRR on Stripe. Congratulations. You now have tax obligations you probably do not know about. SaaS subscription revenue is ordinary business income. Self-employment tax applies. Multi-state sales tax may apply. And if you formed a Delaware C-Corp through Stripe Atlas because Twitter told you to, you may have locked yourself into double taxation that costs thousands per year.

I wrote this guide because the vibe coding ecosystem has exploded (the tools market reached $4.7 billion in 2025, projected to hit $12.3 billion by 2027) but zero CPA-authored tax content targets the people actually building and monetizing software with AI. Andrej Karpathy coined the term "vibe coding" in February 2025. Collins Dictionary named it Word of the Year. 84% of developers now use or plan to use AI coding tools according to the Stack Overflow 2025 Developer Survey. 63% of vibe coders are non-developers with no traditional programming background. Replit reports that 75% of its customers never write a single line of code.

If you are shipping a SaaS product, Chrome extension, mobile app, or API service built with Cursor, Copilot, Replit, Lovable, Bolt.new, or Claude Code, this guide is for you.

Key Takeaways

• SaaS subscription revenue is ordinary income reported on Schedule C, subject to 15.3% self-employment tax on net profit.
• Stripe's 1099-K reports gross revenue before processing fees, refunds, and sales tax collected. Your bank deposits will be lower than the 1099-K amount.
• SaaS is taxable in approximately 25 states. If you use Stripe directly (not a Merchant of Record), you are personally responsible for sales tax compliance in every state where you have economic nexus.
• The Stripe Atlas C-Corp creates double taxation that is wrong for most bootstrapped developers earning under $500K. An LLC taxed as sole prop or S-Corp is almost always better.
• NJ does not tax most SaaS products under Technical Bulletin TB-72, but the "information service" exception can change that analysis.
• Section 174 domestic R&E is immediately expensable starting 2025 under the OBBBA. The 5-year amortization requirement is gone for domestic costs.

In this guide:

1. How SaaS Revenue Is Taxed
2. The SaaS Sales Tax Landmine
3. The Stripe Atlas C-Corp Trap
4. Every Deduction Vibe Coders Can Claim
5. Section 174 R&D Amortization
6. Entity Structure Decision Tree
7. International Revenue: VAT and GST
8. NJ-Specific Tax Rules
9. FAQ

How SaaS Revenue Is Taxed

SaaS subscription revenue is classified as ordinary business income reported on Schedule C (Form 1040) for sole proprietors and single-member LLCs. Net profit is subject to self-employment tax via Schedule SE. The IRC references are Section 446 (general accounting methods), Section 448 (cash method limitations), and Section 451 (timing of income inclusion).

Cash Method Is the Default (and Correct Choice)

Under IRC Section 448, only C corporations and partnerships with corporate partners exceeding $26 million in average annual gross receipts must use accrual. Sole proprietors are explicitly exempt. Under cash method, income is taxable when payment is received, not when the subscription period occurs. A monthly subscription payment hitting Stripe on December 28 is 2026 income regardless of whether the service month runs into January.

Annual subscriptions paid upfront: For cash-method taxpayers, the answer is straightforward. IRC Section 451(c) provides a one-year deferral mechanism for advance payments, but it applies exclusively to accrual-method taxpayers. If you use cash method (and you almost certainly do), an annual subscription payment received upfront is fully taxable in the year received.

Free trials generate zero taxable income under cash method because no payment obligation exists. Income recognition begins only when the first actual charge hits your Stripe account. For freemium models, only revenue from paying customers is reportable.

Stripe 1099-K Reporting After the OBBBA

The OBBBA retroactively reinstated the pre-2022 1099-K threshold: $20,000 in gross payments AND more than 200 transactions. Both conditions must be met. Stripe reports gross revenue on Form 1099-K before processing fees (2.9% plus $0.30), before refunds, before chargebacks, and including sales tax collected. Per Stripe's documentation: "For Form 1099-K, the IRS requires reporting gross reportable amounts without any adjustments."

This means if your bank deposits show $45,000, your 1099-K might show $52,000. The difference is processing fees, refunds, and sales tax passed through. Here is how to report it correctly:

• Schedule C, Line 1 (Gross Receipts): Report the full 1099-K amount ($52,000)
• Schedule C, Line 2 (Returns and Allowances): Report refunds and chargebacks
• Schedule C, Line 10 (Commissions and Fees): Report Stripe processing fees
• Schedule C, Line 27a (Other Expenses): Report sales tax remitted (if you collected it)

This approach matches your reported income to the 1099-K and avoids triggering an IRS Automated Underreporter (AUR) notice, while properly deducting all legitimate expenses.

Apple App Store and Google Play

Both Apple and Google issue Form 1099-K (not 1099-MISC) and both report gross sales before their approximately 30% commission. A developer who received $35,000 in deposits would see a 1099-K for approximately $50,000. Both platforms act as marketplace facilitators for sales tax collection in most states. Apple explicitly states: "Sales on the App Store are between you and the customer. You're the seller of copyrighted works."

Chrome Web Store: You Handle Everything

Google shut down Chrome Web Store Payments in 2020. Per the Developer Agreement, Section 3.2: "If you charge a fee for your Product, you assume sole responsibility and liability for all related transactions and authentications, records, and taxes." Chrome extension developers must use external payment processors (typically Stripe via services like ExtensionPay) and handle all tax compliance independently. No marketplace facilitator protection applies.

The SaaS Sales Tax Landmine

This is the section most likely to save you from a five-figure back-tax bill. Approximately 25 US states tax SaaS, and if you use Stripe directly (not a Merchant of Record), you are personally responsible for compliance in every state where you have economic nexus. The Basecamp case, where the company paid millions in back taxes, is the cautionary tale the indie SaaS community cites most frequently.

Which States Tax SaaS

States that tax SaaS include: Connecticut, Hawaii, Indiana, Iowa (B2C only, B2B exempt), Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Nebraska, New Mexico, New York, Ohio, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas (only 80% of the SaaS price as a "data processing service"), Utah, Vermont, Washington, West Virginia, and Wisconsin.

States that do not tax SaaS include: California (classified as non-taxable service), Florida, Georgia, Kansas, Michigan, Missouri, Nevada, North Carolina, North Dakota, Oklahoma, Oregon (no sales tax at all), Virginia, and Wyoming.

Connecticut applies a reduced 1% rate for business use versus the full 6.35% for personal use. Texas uniquely taxes only 80% of the SaaS price. Iowa taxes B2C but exempts B2B. The classification is genuinely inconsistent across states.

Economic Nexus: The $100K / 200 Transaction Trigger

Following South Dakota v. Wayfair (2018), all 45 states with sales tax have enacted economic nexus laws. The standard threshold is $100,000 in sales OR 200 transactions in the state, though many states are eliminating the transaction count. New Jersey's threshold is $100,000 in NJ-sourced sales OR 200 separate transactions.

The trap: many states count all gross sales (including exempt and non-taxable sales) toward nexus thresholds. You can trigger nexus in a state even if SaaS is exempt there. If your SaaS product generates $150,000 in Texas revenue, you have nexus in Texas and must collect on 80% of each sale.

Notable threshold variations: California requires $500,000 (tangible personal property only), New York requires $500,000 AND 100 transactions (both must be met), and Texas requires $500,000.

Stripe Tax vs. Merchant of Record: Who Actually Handles Compliance

If you use Stripe directly, you are the seller. You must monitor nexus thresholds, register for sales tax permits, calculate rates across 13,000+ jurisdictions, collect tax at checkout, file returns on each state's schedule, and maintain audit-ready records. This is effectively unmanageable for a solo developer.

Stripe Tax automates calculation and collection but you retain legal liability. You must still register for permits and file returns. Stripe Tax adds per-transaction fees on top of standard processing. Its obligation monitoring alerts you when you approach nexus thresholds.

Paddle and Lemon Squeezy operate as Merchants of Record and eliminate ALL sales tax compliance. The MoR is the legal seller, assumes liability, and handles collection, filing, and remittance globally. The trade-off: higher fees (5% plus $0.50 per transaction versus Stripe's 2.9% plus $0.30) but zero compliance burden. Paddle has remitted over $89 million in sales taxes globally.

For a solo developer at $10K MRR, Stripe costs approximately $3,480 per year in processing. Lemon Squeezy costs approximately $6,600. The $3,120 difference is your sales tax compliance cost. If you have nexus in five or more states, the time cost of manual compliance (registrations, filings, exemption certificates) easily exceeds that difference. For most vibe coders, the MoR is the better choice.

What If You Have Been Ignoring Sales Tax

Non-compliance consequences are severe: penalties typically run 10 to 30% of unpaid tax plus interest, with lookback periods of 7+ years for non-filers. Voluntary Disclosure Agreements (VDAs) can reduce lookback to 3 to 4 years and waive most penalties, but require that the business has not been previously contacted or audited by the state.

If you have been collecting SaaS revenue for two years without collecting sales tax, do not panic. Switch to an MoR going forward and consult a CPA about VDAs for states where you had nexus. This is fixable. It is more expensive the longer you wait.

The Stripe Atlas C-Corp Trap

Stripe Atlas makes Delaware C-Corp formation frictionless: $500 one-time plus $100 annually. Over 100,000 founders have used it. The problem: the C-Corp structure creates double taxation that is almost always wrong for bootstrapped solo developers earning under $500,000.

How Double Taxation Works

A C-Corp pays 21% flat federal corporate tax on profits (IRC Section 11). When profits are distributed to you as dividends, you pay a second layer of tax at 0 to 20% qualified dividend rates plus the 3.8% Net Investment Income Tax. The effective combined rate reaches 33 to 40%.

Compare to a sole proprietorship or S-Corp: net income is taxed once at your individual rate. At $150,000 in net profit:

The C-Corp costs roughly $5,000 to $8,000 more per year than optimal pass-through structuring at $150K profit. At $100K profit, the gap is still $3,000 to $5,000.

When C-Corp IS the Right Choice

Raising venture capital. Investors expect Delaware C-Corp with preferred stock, board governance, and institutional structure. If you are applying to Y Combinator or raising a seed round, C-Corp is correct.

QSBS exclusion (IRC Section 1202). If you plan to eventually sell your SaaS company, the Qualified Small Business Stock exclusion can eliminate federal capital gains tax entirely. For stock acquired after July 4, 2025 (post-OBBBA): 50% exclusion at 3 years, 75% at 4 years, 100% at 5+ years. The per-issuer cap is $15 million (increased from $10 million by the OBBBA), indexed for inflation from 2027. Aggregate gross assets must be $75 million or less (increased from $50 million post-OBBBA).

On a $20 million exit, a founder who chose S-Corp over C-Corp could owe $3 million or more in federal capital gains tax that QSBS would have eliminated. This is the one scenario where the C-Corp's annual cost disadvantage can be worth it, but only if you hold for the full 5 years and the company qualifies.

Better Alternatives for Most Vibe Coders

Single-member LLC (disregarded entity): identical Schedule C tax treatment to sole proprietorship, but with liability protection. NJ LLC costs $125 to form and $75 per year for the annual report. Can later elect S-Corp or C-Corp taxation without changing legal structure.

LLC with S-Corp election (Form 2553): splits income into salary (subject to payroll tax) and distributions (not subject to SE/payroll tax). Makes sense at $60,000 to $80,000+ net profit. See the entity structure decision tree below.

If you already formed a C-Corp through Stripe Atlas and it is not appropriate for your situation, converting to S-Corp status is possible by filing Form 2553 (with built-in gains tax considerations under IRC Section 1374). Consult a CPA before making this change.

Every Deduction Vibe Coders Can Claim

All deductions below fall under IRC Section 162(a) (ordinary and necessary business expenses) and are reported on Schedule C. For freelance developer-specific guidance, see the freelance developer industry page.

AI Coding Tools: $1,200 to $3,000+ Per Year

Label these as "Software Subscriptions" or "AI Development Tools" on Line 27a. If used exclusively for your SaaS product, 100% deductible. For mixed personal and business use, deduct the business-use percentage and document your methodology.

Cloud Hosting and Infrastructure

Report on Schedule C, Line 27a as "Cloud Hosting" or "Web Hosting."

Payment Processing Fees

Stripe's 2.9% plus $0.30 per transaction is fully deductible on Schedule C, Line 10 (Commissions and Fees). At $10K MRR, that is approximately $3,480 per year in deductible processing fees. Using the gross reporting method described above aligns your deductions with 1099-K amounts.

Design, Analytics, Email, and Marketing

• Design tools: Figma ($15/mo), Canva Pro ($15/mo) on Schedule C, Line 27a
• Analytics: Plausible ($9/mo), PostHog (usage-based), Mixpanel on Line 27a
• Email services: Resend, Postmark, ConvertKit on Line 27a
• Marketing: Product Hunt launch costs, advertising, LinkedIn Premium (business portion) on Line 8
• Legal: Terms of service drafting, privacy policy, trademark filing on Line 17

Home Office Deduction

The simplified method provides $5 per square foot for up to 300 square feet, yielding a maximum $1,500 deduction on Schedule C, Line 30. No Form 8829 required. The regular method requires Form 8829 and allows the business-use percentage of rent or mortgage interest, property taxes, utilities, insurance, repairs, and depreciation. IRS Publication 587 governs eligibility.

Hardware

Computers, monitors, and peripherals qualify for full first-year expensing. Section 179 allows up to $2,560,000 in immediate deductions for 2026. The OBBBA permanently restored 100% bonus depreciation for property placed in service after January 19, 2025. For items under $2,500, the de minimis safe harbor (Treasury Regulation Section 1.263(a)-1(f)) is the simplest path.

Incorporation and Organizational Costs

The first $5,000 of organizational expenses is deductible immediately under IRC Section 248 (corporations) or Section 709 (partnerships/LLCs), provided total organizational costs do not exceed $50,000. The remainder is amortized over 180 months. Stripe Atlas's $500 fee, as an organizational expense under $5,000, is fully deductible in year one.

Section 174 R&D Amortization

This section matters for any vibe coder who pays contractors to write code or who spent money on development in 2022 through 2024.

What Changed with the OBBBA

The TCJA's 2022 amendment to IRC Section 174 required 5-year amortization of all domestic software development costs and 15-year amortization for foreign costs. This created massive compliance headaches for even the smallest software businesses. The OBBBA created new IRC Section 174A, which allows immediate full expensing of domestic R&E expenditures for tax years beginning on or after January 1, 2025. The 5-year amortization requirement is eliminated going forward for domestic costs.

Foreign R&E still requires 15-year amortization. If you pay an overseas contractor to write code, those costs must be amortized over 15 years, not expensed immediately.

What This Means for Vibe Coders

For 2026 and beyond: your domestic software development costs (contractor payments, AI tool subscriptions used in development, cloud computing for development environments) are immediately deductible under Section 174A. Rev. Proc. 2025-28 provides compliance guidance.

For 2022 through 2024: if you had development costs during these years that you failed to capitalize and amortize, you may need to file amended returns. "Eligible small businesses" may elect to apply Section 174A retroactively for 2022 through 2024 by amending returns before July 6, 2026.

Important nuance for sole proprietors: Your own labor and time spent on development was never a deductible expense in the first place (you cannot pay yourself a wage as a sole proprietor). Section 174 applied to actual out-of-pocket expenditures like contractor costs and supplies. If you built your SaaS entirely by yourself using AI tools, your deductible development costs are limited to the tool subscriptions and hosting fees you paid.

Entity Structure Decision Tree

The right entity depends on your revenue, goals, and whether you plan to raise outside investment. Here is how I advise clients. For a deeper dive, see my sole prop vs LLC vs S-Corp guide.

Under $50K Net Profit: Stay Simple

Sole proprietorship (or single-member LLC for liability protection) reporting on Schedule C. Administrative costs: effectively zero for sole prop, $125 formation plus $75 per year for NJ LLC. Do not overcomplicate your life with entity elections until the tax savings justify the compliance burden.

$50K to $150K Net Profit: Evaluate S-Corp

Run the numbers using the S-Corp calculator. At $80K net profit with a $50K reasonable salary, S-Corp saves approximately $4,200 in SE tax minus $2,000 to $3,000 in compliance costs for net savings of roughly $1,200 to $2,200. At $150K net profit with a $75K salary, savings reach approximately $9,700 minus compliance costs for net savings of $4,700 to $6,700.

Form 2553 must be filed by March 15 for current-year election. Late relief is available under Rev. Proc. 2013-30 within 3 years and 75 days.

$150K+ Net Profit: S-Corp Almost Certainly

At this level, the SE tax savings ($9,700+ per year minus $3,000 to $5,000 in compliance costs) clearly justify the additional complexity. The IRS requires a "reasonable salary" comparable to what you would pay an employee to do your job. For a solo SaaS developer, $50,000 to $100,000+ is the defensible range depending on the product's complexity and your time commitment.

Raising Outside Investment: C-Corp

If you are pursuing venture capital, Y Combinator, or institutional investors, form a Delaware C-Corp. Investors expect it. The QSBS exclusion under IRC Section 1202 (up to $15 million in gain exclusion post-OBBBA) provides significant exit tax benefits that only apply to C-Corp stock. Accept the annual double-taxation cost as the price of venture compatibility.

Delaware vs. Wyoming vs. NJ

NJ residents forming in Delaware or Wyoming still owe NJ income tax on all worldwide income. NJ taxes residents on global income regardless of where the entity is formed. Forming in Delaware costs: $300 annual franchise tax plus NJ foreign LLC registration ($125) plus NJ annual report ($75/year) plus registered agent fees (~$100 to $200/year). Total: approximately $500 to $700 per year versus $75 per year for a domestic NJ LLC, with zero tax savings. Form in your home state unless you have a specific legal reason (like VC fundraising requirements) to do otherwise.

International Revenue: VAT and GST

If you sell SaaS globally, you face VAT/GST obligations that differ sharply from domestic sales tax. SaaS is classified as "electronically supplied services" under EU VAT law.

Key International Thresholds

• EU VAT: Registration required from the first B2C sale to EU consumers. No de minimis threshold for non-EU sellers. The Non-Union One-Stop Shop (OSS) allows single registration covering all 27 member states. Rates range from 17% to 27% (average approximately 21%). B2B sales use the reverse charge mechanism.
• UK VAT: Standard rate of 20%. Registration required from the first B2C sale with no threshold for non-resident digital service providers.
• Australia GST: Rate of 10%. Registration threshold is AUD 75,000 per year in Australian B2C digital services sales.
• Canada GST/HST: Rate of 5% (some provinces 13 to 15% with HST). Registration threshold is CAD 30,000 in sales to Canadian consumers over any 12-month period.

Merchant of Record Eliminates International Compliance

Paddle and Lemon Squeezy handle all VAT/GST obligations as Merchant of Record. Paddle has remitted over $89 million in sales taxes globally across 100+ jurisdictions. If you sell internationally, this is the strongest argument for using an MoR over raw Stripe. For more on ecommerce tax considerations, see the industry guide.

VAT Is Not Creditable on Your US Return

All foreign SaaS revenue is fully taxable in the US. VAT/GST is a consumption tax, not an income tax, and is therefore not creditable as a foreign tax credit on Form 1116. If you use an MoR, this is handled for you. If you collect and remit VAT yourself, it is deductible as a business expense on Schedule C but does not reduce your US tax dollar for dollar.

NJ-Specific Tax Rules for Vibe Coders

TB-72: NJ Does Not Tax Most SaaS

NJ Technical Bulletin TB-72 (July 3, 2013) is the authoritative guidance. SaaS is not subject to NJ sales tax because the customer never receives title to or takes possession of the software. The software remains hosted by the provider, and the customer only has remote access. Under N.J.S.A. 54:32B-3(a), sales tax applies to "receipts from every retail sale of tangible personal property," and SaaS does not qualify.

The critical exception: SaaS products that qualify as "information services" under N.J.S.A. 54:32B-2(yy) ARE taxable. This is defined as "the furnishing of information of any kind, which has been collected, compiled, or analyzed by the seller." Examples include Westlaw, LexisNexis, and similar research databases. A SaaS tool that provides access to software functionality (like a project management app) is not taxable. A SaaS product that primarily delivers compiled analytical data could be taxable. This is a fact-specific, case-by-case determination.

NJ's standard sales tax rate is 6.625% statewide, but this rate does not apply to standard SaaS products.

NJ Gross Income Tax

Schedule C business income flows to Schedule NJ-BUS-1 on the NJ-1040 and is taxed at progressive rates from 1.4% to 10.75% (the 4th highest state rate nationally). The NJ standard deduction is only $1,000 single or $2,000 MFJ. NJ does not conform to federal bonus depreciation, requiring regular MACRS depreciation on the state return. NJ does not allow the federal QBI deduction.

NJ BAIT for S-Corp SaaS Businesses

The Business Alternative Income Tax is an elective entity-level tax on S-Corps and partnerships that provides a federal SALT cap workaround. The entity pays tax at the entity level (deductible on the federal return, bypassing the SALT cap), and each owner receives a refundable credit against their NJ GIT. Election must be made by March 15 on Form PTE-100. Single-member LLCs and sole proprietorships are not eligible. BAIT rates: 5.675% on the first $250,000, 6.52% on $250K to $1M, 9.12% on $1M to $5M, 10.9% over $5M.

NJ Estimated Tax and Filing Requirements

NJ estimated tax is required if your NJ tax obligation exceeds $400 after credits. Due quarterly: April 15, June 15, September 15, January 15. Safe harbor: pay 80% of current-year NJ tax or 100% of prior-year tax (110% if taxable gross income exceeds $150,000). Underpayment penalty: approximately 11.5% annualized (prime plus 3%), computed on Form NJ-2210. Use the estimated tax calculator to plan your payments.

NJ LLC annual report: $75 per year, due by the end of the anniversary month. Failure to file for 2 consecutive years may result in administrative dissolution. S-Corps file Form CBT-100S electronically. Federal S-Corp elections now automatically apply for NJ purposes (effective December 23, 2022). NJ S-Corp minimum taxes based on NJ gross receipts: $375 (under $100K), $562.50 ($100K to $250K), $750 ($250K to $500K), $1,125 ($500K to $1M), $1,500 ($1M+).

FAQ

My SaaS is making $500 per month. Do I really need to worry about taxes?

Yes. $500 MRR is $6,000 per year. If your net profit exceeds $400, you owe self-employment tax (there is no minimum threshold for SE tax under IRC Section 1402). File Schedule C and Schedule SE. You probably do not need to make estimated tax payments yet if your total tax obligation is under $1,000 after withholding from any W-2 job.

Do I need to collect sales tax on my SaaS product?

It depends on where your customers are located and whether you have economic nexus in states that tax SaaS. If you have customers in 25+ states and use Stripe directly, you likely have sales tax obligations. The fastest solution: switch to a Merchant of Record like Paddle or Lemon Squeezy, which handles all collection and remittance. For NJ-based SaaS products sold to NJ customers, TB-72 generally exempts SaaS from NJ sales tax unless it qualifies as an information service. See the NJ sales tax guide for details.

I used Stripe Atlas to form a C-Corp. Should I switch?

Possibly. If you are bootstrapped, not raising VC, and earning under $500K, the C-Corp's double taxation likely costs you $3,000 to $8,000+ per year compared to pass-through treatment. You can convert to S-Corp by filing Form 2553, but consider built-in gains tax implications under IRC Section 1374. If you are planning a large exit (over $10 million), the QSBS exclusion may justify keeping the C-Corp. Consult a CPA before converting.

Can I deduct Cursor, Copilot, and Claude subscriptions?

Yes. AI coding tool subscriptions are ordinary and necessary business expenses under IRC Section 162(a) when used for your SaaS business. Deduct the business-use percentage on Schedule C, Line 18 or Line 27a. Keep records showing these tools are used for your revenue-generating product.

What is the difference between Stripe and a Merchant of Record?

Stripe is a payment processor. You are the seller, you handle sales tax compliance, and you receive a 1099-K. A Merchant of Record (Paddle, Lemon Squeezy) is the legal seller. They handle sales tax, VAT/GST, chargebacks, and compliance globally. You receive payouts as a vendor. The MoR costs more per transaction (approximately 5% versus 2.9%) but eliminates multi-state and international tax compliance entirely.

Do I need to charge VAT to European customers?

If you sell B2C to EU consumers and are not using a Merchant of Record, yes. There is no de minimis threshold for non-EU sellers of digital services. Register through the EU Non-Union One-Stop Shop (OSS) in one member state. If you use Paddle or Lemon Squeezy, they handle all VAT as the seller of record.

When should I switch from sole proprietorship to S-Corp?

When your net profit consistently exceeds $60,000 to $80,000 per year and the SE tax savings (after compliance costs of $2,000 to $5,000 annually) produce a meaningful net benefit. At $80K net, S-Corp saves approximately $4,200 in SE tax. At $150K net, savings reach approximately $9,700. The break-even point after compliance costs is typically around $60K to $80K net. Use the S-Corp calculator to run your specific numbers.

Your SaaS product does not care whether you understand sales tax nexus or Section 174 amortization. The IRS does. If your Stripe dashboard shows growing MRR and you have not talked to a CPA, schedule a free consultation and I will help you build a tax structure that matches your business.

Circular 230 Disclosure: This post provides general tax information and is not a substitute for personalized tax advice. Consult a qualified tax professional for advice specific to your situation.