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Save on Self-Employment Taxes

Form an S Corporation

Save on self-employment taxes by electing S corp status for your LLC. Many small business owners save thousands per year.

Get Started Included in formation

* Consult with a tax professional to determine if S Corp election is right for your situation.

Tax Savings Example

Example calculation

$
$

Potential Tax Savings

~6,400/年

* Consult with a tax professional to determine if S Corp election is right for your situation.

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How S Corp Election Works

An S corporation election allows your LLC to be taxed as a pass-through entity, but with a key advantage.

1 Default LLC Taxation

With a default LLC, all profits are subject to self-employment tax (Social Security + Medicare).

$100,000 profit =

~$15,300 in self-employment taxes

2 With S Corp Election

Pay yourself a reasonable salary (subject to payroll tax), take the rest as distributions (not taxed).

$100,000 profit - $60,000 salary =

~$8,900 in payroll taxes (saves ~$6,400)

S Corp Requirements

Domestic Corporation

Your LLC must be a domestic corporation formed in the US

100 Shareholders or Less

Spouses can be counted as one shareholder

Single Class of Stock

All shareholders must agree to S corp status

Eligible Shareholders

Must be US citizens, residents, or certain trusts and estates

Frequently Asked Questions

When should I elect S corp status?
Most business owners benefit from S corp election when their net income exceeds $40,000-$80,000 per year, after accounting for the cost of payroll and additional tax filings.
How much can I save with S corp election?
Savings vary based on income. For example, if your business earns $100,000 and you pay yourself a $60,000 salary, you could save approximately $6,400 in self-employment taxes compared to a default LLC.
What is a reasonable salary?
A reasonable salary should reflect the duties you perform and industry standards. The IRS looks for salaries that are reasonable for the services provided.
When must I file Form 2553?
Form 2553 must be filed within 2 months and 15 days after the beginning of the tax year, or at any time during the preceding tax year.
Are there downsides to S corp election?
S corps require more paperwork, including payroll tax filings and shareholder meetings. You also need to pay yourself a reasonable salary, which triggers payroll taxes.

Ready to save on taxes?

Our tax partners can help you determine if S corp election is right for your business.

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