Elect S-Corp status. Save thousands in self-employment tax.
The S-Corporation election is a tax classification, not an entity type. For profitable single-member LLCs and closely-held corporations, electing S-Corp status under Subchapter S of the Internal Revenue Code can save thousands per year in self-employment tax. We file IRS Form 2553 and coordinate state-level elections.
The S-Corp election, with the math made simple.
S-Corp is not a separate kind of company. It is a federal tax election that an existing LLC or Corporation can make by filing IRS Form 2553. Once accepted, the entity is taxed as a pass-through (like a partnership) and the owner can split compensation between a W-2 salary and tax-distinct profit distributions.
Why founders elect it: Self-employment tax (Social Security and Medicare, 15.3% combined) applies to LLC pass-through income up to the Social Security wage base. After the S-Corp election, only the W-2 salary portion is subject to payroll tax; the distribution portion is not. The savings can be substantial.
An example. A single-member LLC consultant in Texas with $150,000 in net profit pays approximately $22,950 in self-employment tax (15.3% × $150,000). If the same business elects S-Corp status and pays the owner a $75,000 reasonable salary, payroll tax drops to about $11,475, and the remaining $75,000 is taken as a distribution with no self-employment tax. Annual savings: roughly $11,475.
The trade-offs: The S-Corp election creates new obligations. You must run payroll for yourself (typically $40–80/month), file an annual Form 1120-S (typically $800–1,500 to a CPA), pay yourself a reasonable salary or face IRS reclassification, and meet state-level franchise tax minimums (California's is $800/year). The break-even where savings exceed new costs is roughly $50,000–60,000 in net profit.
Is this the right service for you?
Profitable LLCs over $60k net
Single-member LLCs with net profit over about $60,000 typically save more in self-employment tax than the new costs add.
Independent consultants & freelancers
Knowledge-work professionals are the classic S-Corp use case. Reasonable salary for the work performed plus distribution from profit.
Professional service firms
Doctors, lawyers, accountants, architects, and similar high-income service providers.
Family businesses
Closely-held US-owner businesses that want pass-through taxation plus the ability to take some profit as a distribution.
Active real estate operators
Real estate professionals who materially participate, especially those with US-citizen ownership only.
Late elections needed
Missed the March 15 deadline? IRS provides late-election relief under Rev. Proc. 2013-30 with reasonable cause. We file the relief request.
A clean handoff, in four steps.
You give us the basics. We handle the state, the IRS, and the compliance clock so you can focus on the business.
A name that's actually available.
Real-time check against the state register, USPTO trademark database, and matching domains.
Filed with the Secretary of State.
We submit your Articles, pay the state fee on your behalf, and return the stamped certificate.
EIN + the right tax setup.
Federal Employer ID with the IRS, plus state tax accounts when your business needs them.
Registered Agent + deadline tracking.
Your agent on file in every state, with every renewal and annual report tracked in one calendar.
Four steps. We do most of them.
Run the savings math
We project your self-employment tax savings vs. the new costs (payroll service, 1120-S preparation, state minimum franchise tax). If the math works, we recommend electing. If not, we say so.
Verify eligibility
Eligibility checks: all owners are US citizens or resident aliens, owner count is 100 or fewer, ownership is held by individuals or qualifying trusts (not partnerships, corporations, or non-US persons), and there is only one class of stock or LLC interest.
Prepare and file Form 2553
We prepare Form 2553 with the effective date, all owner consents, and supporting elections (Section 1361, late-election relief if needed). The form is filed by certified mail with tracking; we also submit the CCC online code when available.
Set up payroll and track deadlines
Once elected, you must run W-2 payroll for yourself. We coordinate with our payroll partner so your first paycheck is timely and the year's salary is on pace. The Compliance Suite tracks your new 1120-S deadline (March 15) and quarterly estimated taxes.
What you save by filing through us.
Compared to the alternatives most founders consider.
- Save the service fee
- Easy to fill out incorrectly
- No late-relief if you miss March 15
- No reasonable-salary analysis
- No state election coordination
- No payroll setup
- Filed correctly
- Reasonable-salary advice
- Audit defense if asked
- Hourly billing
- No payroll coordination
- No compliance tracking
- Form 2553 prepared and filed
- Late-election relief if needed
- State-level election coordinated
- Reasonable salary documented
- Payroll setup included
- 1120-S deadline tracked
Frequently asked questions.
When is the deadline to elect S-Corp status?
What if I missed the March 15 deadline?
How much do I have to pay myself in salary?
What states require a separate S-Corp election?
Can my LLC elect S-Corp directly, or do I need to convert to a Corporation first?
How does S-Corp affect my self-employment tax?
Are there S-Corp situations I should avoid?
Can I revoke the S-Corp election later?
What is Form 1120-S and when is it due?
Related services
Form an LLC
S-Corp election works for LLCs too. Form first, then elect.
Explore →Form a Corporation
If you are forming new and electing immediately, start as a Corp.
Explore →S-Corp Guide
6-minute read with the full math, trade-offs, and common mistakes.
Explore →Payroll tools
Required for your new W-2 salary. Powered by our partner.
Explore →