Cabinet Installation Business: S-Corp vs. Sole Proprietorship Tax Comparison

By Yarik Yarosh, CPA ·September 5, 2026 ·4 min read

Written by Yarik Yarosh, CPA (US & Canada) September 5, 2026 · FL CPA license AC61704 · CPA Ontario

Cabinet installation and custom cabinetry fall squarely in the trades category. The work isn’t a specified service trade or business (SSTB) under IRC 199A, so the full 20% QBI deduction applies regardless of income. The business spans two models: install-only operations (purchasing pre-fabricated cabinets and installing them) and custom shops (designing, building, and installing). Custom shops have higher equipment costs (CNC router, table saw, edge bander) but also higher margins. Materials represent 40-60% of revenue for custom work and 50-70% for install-only operations.

✓Key takeaway

Cabinet installation S-Corp analysis:

Industry characteristics:

Revenue per kitchen (install-only): $5,000-$15,000
Revenue per kitchen (custom build + install): $15,000-$50,000
Revenue per bathroom vanity: $1,000-$5,000
Materials: 40-60% of revenue (custom), 50-70% (install-only)
Workers’ comp: 4-7% of payroll (shop + field work)
Licensing: general contractor or specialty license depending on state
Demand: tied to housing market and remodeling cycles

NOT an SSTB: Cabinet work is a construction/manufacturing trade. Full QBI deduction at all income levels.

S-Corp break-even (at 5% workers’ comp):

At $80,000 net profit:

Sole prop SE tax: $11,298
S-Corp: salary $45,000, WC $2,250, employer FICA $3,443, payroll $1,200, return $1,000
S-Corp total: $7,893
Savings: $3,405

At $120,000 net profit:

Sole prop SE tax: $16,946
S-Corp: salary $55,000, WC $2,750, employer FICA $4,208, payroll $1,200, return $1,000
S-Corp total: $9,158
Savings: $7,788

At $180,000 net profit:

Sole prop SE tax: $22,406
S-Corp: salary $65,000, WC $3,250, employer FICA $4,973, payroll $1,200, return $1,000
S-Corp total: $10,423
Savings: $11,983

Break-even: approximately $50,000-$60,000 net profit. The low workers’ comp rate makes this one of the lowest break-even points among the trades. Custom cabinet shops with CNC equipment often reach this threshold in year one.

What does a custom cabinet business’s tax picture look like?

Hypothetical example

Round numbers. A sole proprietor custom cabinet shop (builds and installs). Revenue: $250,000 (20 kitchens at $12,500 average). Single filer.

Revenue: $250,000

Expenses:

Materials (plywood, hardwood, hardware, finishes): $112,500 (45%)
Shop lease: $18,000
Vehicle (12,000 miles x $0.70): $8,400
Insurance (GL + auto): $4,000
Tools and supplies: $3,000
Marketing: $6,000
Software (CAD, accounting): $2,000
Phone, utilities: $3,000
Total expenses: $156,900

Net profit: $93,100

As sole prop:

SE tax: $93,100 x 92.35% x 15.3% = $13,148
Income tax: approximately $9,200
Total: $22,348

As S-Corp (salary $48,000, 5% WC):

Employer FICA: $3,672
WC: $2,400
K-1: $93,100 - $48,000 - $3,672 - $2,400 = $39,028
Employee FICA: $3,672
Income tax on $87,028: approximately $10,500
Compliance: $2,200
Total: $16,372
Savings: $5,976/year

CNC router purchase: A CNC router ($30,000-$80,000) transforms a custom shop’s production capacity. Section 179 in the purchase year:

$50,000 CNC router, fully deducted in Year 1
Net profit after 179: $93,100 - $50,000 = $43,100
Tax on $43,100 (sole prop): approximately $9,400
Tax saved by CNC timing: $22,348 - $9,400 = $12,948

For custom cabinet shops, the CNC purchase year and the S-Corp election are the two biggest single-year tax planning decisions.

Illustrative numbers only, not a real client and not advice for your facts.

What happens to my business if I die without a succession plan?

Without a succession plan, your business’s fate depends on its legal structure. A sole proprietorship has no legal existence apart from you and simply ceases to exist. A single-member LLC’s operating agreement may or may not grant transfer rights to your estate. If it is silent, state default rules apply, and most states allow the interest to pass but not management rights, leaving the estate with an economic interest it cannot control. An S-Corp’s shares pass through the estate, but if the heir is an ineligible S-Corp shareholder (a nonresident alien, for example), the election terminates retroactively. A buy-sell agreement funded by life insurance is the standard solution: the policy pays out at death, and the agreement dictates who buys the interest and at what price.

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Cite this page

Yarik Yarosh, CPA. "Cabinet Installation Business: S-Corp vs. Sole Proprietorship Tax Comparison." Blue Cloud CPA, September 5, 2026. https://bluecloudcpa.com/guides/cabinet-installation-entity-structure-scorp

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.