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Service · S-Corp Election

One election.
Potentially thousands saved.

The S-Corp election is one of the most powerful tax strategies available to profitable small business owners, but it only makes sense at the right income level and requires proper setup. We run the numbers and handle everything if it makes sense for you.

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How it works

The S-Corp strategy explained simply

No jargon. Just the logic.

01

The problem with self-employment tax

As a sole proprietor or single-member LLC, you pay 15.3% self-employment tax on all net profit. On $150K of profit, that is $22,950, before income tax.

02

How the S-Corp helps

An S-Corp lets you split income between a salary (subject to payroll taxes) and distributions (not subject to SE tax). The split saves you SE tax on the distribution portion.

03

The math

On $150K profit with a $75K reasonable salary, you save SE tax on the other $75K, roughly $10,000+ in savings. Minus payroll costs, you are still significantly ahead.

What we do

Full S-Corp setup and management

  • S-Corp election analysis, is it right for your income level?
  • Form 2553 filing (the S-Corp election)
  • Reasonable compensation determination
  • Payroll setup for owner salary
  • Quarterly payroll tax filings
  • Annual S-Corp tax return (Form 1120-S)

Is an S-Corp right for you?

Generally, an S-Corp election makes sense when your net business income exceeds $40,000–$50,000 per year. Below that, the payroll costs and added complexity may outweigh the savings.

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FAQ

S-Corp questions

When should I file the S-Corp election? +
The election must be filed by March 15th of the tax year you want it to take effect, or within 75 days of forming your entity. Late elections are possible in some cases, book a call and we will assess your options.
What is a reasonable salary for an S-Corp owner? +
The IRS requires S-Corp owners to pay themselves a reasonable salary, what someone would earn doing the same work. This is one of the most scrutinized areas for S-Corps. We help you set a defensible salary based on your industry and income.
Can I convert my existing LLC to an S-Corp? +
Yes. You keep your LLC and simply file an election to be taxed as an S-Corp. The LLC structure stays the same, only the tax treatment changes.

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