S Corp Election
An S corporation election can lower self-employment tax once profit is high enough to cover a reasonable salary and the added payroll costs. We prepare Form 2553, file it with the IRS, and verify your state compliance – all for a flat $299.
Secure checkout via Stripe. Prepared by an Enrolled Agent. Final scope confirmed in writing before any work begins.
In short: An S corporation election changes how your LLC or corporation is taxed and can reduce self-employment tax for profitable businesses. For a flat fee we prepare Form 2553, file it with the IRS, confirm acceptance, and verify your state-level compliance. It suits owners whose profits have grown well beyond a reasonable salary.
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What's Included
- IRS Form 2553 preparation and review
- IRS filing and confirmation tracking
- State compliance verification
- Reasonable compensation guidance
- Payroll setup recommendations
Timing: Scope and timing are confirmed in writing before an engagement begins.
Not included:
- Payroll setup (quoted separately)
- S-Corp tax return preparation
What Happens After You Purchase
- 1Secure checkout via Stripe
- 2Your client portal invitation arrives by email
- 3Upload your documents securely
- 4Prepared and delivered by an Enrolled Agent
"Arc & Ledger provided exceptional service, making my tax preparation seamless and stress-free."
- Christian S.
How an S Corp Election Can Lower Self-Employment Tax
As a sole proprietor or single-member LLC, you pay 15.3% self-employment tax on 92.35% of your net business income (the 12.4% Social Security part stops at the annual wage base). An S Corporation election allows you to split your income into two parts: a reasonable salary (subject to payroll taxes) and distributions (not subject to self-employment tax).
Physician in California? See our physician guide.
As a hypothetical example, a business earning $120,000 in net profit that pays a $60,000 salary and takes $60,000 in distributions could save roughly $7,800 per year in self-employment taxes. Actual savings depend on your income level, reasonable salary determination, and state tax rules.
Hypothetical Example
Hypothetical example on $120K net profit: ~$7,800/year in self-employment tax savings. Actual results vary by individual circumstances.
S Corp Election
- Form 2553 preparation
- IRS filing and confirmation
- State-level S Corp compliance check
- Reasonable compensation guidance
- Payroll setup recommendations
- Deadline monitoring
How It Works
Three steps from purchase to a filed election.
Purchase & Provide Details
Complete your purchase and provide your entity information, formation date, and shareholder details via our intake form.
We Prepare Form 2553
We prepare the election form with the correct effective date, verify state compliance requirements, and review reasonable compensation considerations.
Filed with IRS
Form 2553 is filed with the IRS. You receive confirmation of acceptance and guidance on next steps for payroll and tax compliance.
Key Considerations
An S Corp election helps some businesses and not others. Here is what to consider.
Timing Matters
Must be filed within 2 months and 15 days after the start of the tax year it is to take effect (March 15 for an existing calendar-year entity). Late elections may qualify for relief with reasonable cause.
Reasonable Salary
The IRS requires S Corp owner-employees to pay themselves a reasonable salary. Setting it too low can lead to reclassified wages, back payroll taxes, and penalties.
Payroll Required
S Corps must run payroll for owner-employees. This adds administrative cost that has to be weighed against the tax savings.
State Variations
California imposes a 1.5% franchise tax on S Corps. New York City does not recognize the election. We check your state.
Shareholder Limits
S Corps are limited to 100 shareholders (family members can count as one). Shareholders must be U.S. citizen or resident individuals, estates, certain trusts, or certain tax-exempt organizations; partnerships, corporations, and nonresident aliens cannot own shares.
Single Class of Stock
S Corps can only have one class of stock. If you need preferred shares or complex equity structures, a C Corp may be better.
Not sure yet? Start with the review.
The Entity & S-Election Review is a standalone diagnostic, separate from the $299 filing service on this page. Before any Form 2553 is prepared, an Enrolled Agent reviews your entity choice, income level, reasonable compensation outlook, and state treatment, then delivers a written recommendation on whether the S election fits your situation and, if so, when it should take effect.
If the review suggests the election is not the right move for your business, you keep the written analysis and skip the filing. If it is, you proceed with a clear, documented basis for the decision.
Already an S-corp? See the S-Corp Tax Health Check instead: a diagnostic of your existing election, payroll, and compliance setup.
Entity & S-Election Review
- Entity choice review (LLC, S Corp, C Corp)
- S-election suitability analysis
- Reasonable compensation outlook
- State-level treatment check
- Effective-date and timing guidance
- Written recommendation from an Enrolled Agent
- Fee credited toward the work that follows
Free Screening Tool
Answer a few facts and see how the employment-tax mechanic applies, calculated in your browser. No documents, no signup.
Entity & S-Election: free 2-minute screening
Answer a few facts - no documents, no signup. You see the free result instantly, in your browser.
Frequently Asked Questions
Common questions about this service area.
Related Guides
Learn more about this topic with our in-depth guides.
California Business Tax Guide
S-Corp tax treatment in California, including the 1.5% net income tax and franchise tax implications.
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How loan-out companies and S-Corp elections work for actors, writers, and producers in Los Angeles.
Read GuideContent Creator & Influencer Tax Guide
S-Corp and LLC formation strategies for creators earning significant platform income.
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EIN + S-Corp Election + Registered Agent in one checkout.
Questions about the S corp election?
We can look at whether the election fits your profit level and salary before anything is filed.
Arc & Ledger takes on work selectively. Each request is reviewed for fit with our practice areas, and scope and timing are confirmed in writing before an engagement begins.
“Arc & Ledger provided exceptional service, making my tax preparation seamless and stress-free.”– Christian S., Google Review
A secure Client Portal invitation is sent only after Arc & Ledger accepts the engagement or you purchase an available fixed-scope service. A call, waitlist entry, or contact form alone does not create portal access.