You're paying 15.3% self-employment tax on every dollar of profit. That number doesn't have to be that high. An S-Corp election splits your income into salary and distributions — and distributions don't face SE tax. For the right business owner, that's $5,000 to $20,000 back every year. Permanently.
Here's the mechanics: the IRS taxes 100% of a sole proprietor's net income as self-employment income. An S-Corp changes that math. You pay yourself a defensible, market-rate salary — only that amount runs through payroll taxes. The rest flows out as a distribution. Distributions are not subject to self-employment tax. That gap between your salary and your total income is where the savings live.
As an LLC: $22,950 in SE tax, no choice. As an S-Corp with a $75,000 reasonable salary: $11,475 in payroll taxes. That's $11,475 you keep every year — without working harder, without new revenue, without risk. And that's before the accountable plan savings stack on top.
An S-Corp makes financial sense above roughly $40,000–$50,000 in net self-employment income. Below that, administrative costs eat the savings. We run the exact numbers for your situation first — always.
No estimates, no guesswork. We run your actual income, your state's tax rates, your payroll costs, and your reasonable salary range through a real financial model. You see the projected savings before you sign anything. If it doesn't pencil out, we tell you — and we tell you what income level changes that answer.
We file Form 2553, establish payroll, configure distributions, and set up your accountable plan — everything done correctly from day one.
We determine the defensible, IRS-appropriate salary for your specific role and revenue — optimized for your tax position and documented properly.
Late payroll deposits, missed quarterly 941 filings, incorrect W-2s — the IRS notices. We handle the compliance calendar so your structure stays clean, your savings stay real, and you never get a letter asking why your payroll records don't match your return.
Your S-Corp reimburses personal business expenses tax-free — no income tax, no payroll tax. Adds $3,000–$10,000 in additional annual savings for most owners.
Form 1120-S preparation, quarterly estimates, and year-round advisory as your business grows and changes.
Your first consultation is free. We'll identify exactly what applies to your situation.