S-Corp election for your New York entity.

It is a federal tax election, filed on IRS Form 2553, that changes how your LLC or corporation is taxed, not what kind of entity it is. Instead of all profit being subject to self-employment tax, you pay yourself a reasonable salary and take the rest as distributions that avoid that tax. It only pays off past a certain profit level, where the tax saved outweighs the added payroll and filing cost.

For an existing entity, generally within two months and fifteen days after the start of the tax year you want it to take effect, so roughly mid-March for a calendar-year business electing for that year. A new entity has the same window from its formation date. Miss it and you usually wait until next year, though the IRS allows late elections with reasonable cause. We file it inside the window so timing is not what costs you.

In most states, New York automatically follows the federal S-corp election, so you do not file a separate state form and the pass-through treatment carries to your New York return. A few states require a separate state-level election or impose their own tax on S-corps. We confirm New York's exact treatment so you are not surprised by a state filing or a franchise tax the federal election does not remove.

It is the wage the IRS requires an S-corp owner-employee to pay themselves before taking distributions, meaning what a comparable business would pay someone to do your job. Set it too low to dodge payroll tax and you invite an audit and reclassification; set it sensibly and the distributions above it are legitimately free of self-employment tax. Getting this number right is the core of doing an S-corp correctly, and we help you support it.

When profit is modest, because the payroll service, extra tax return, and admin load can cost more than the self-employment tax you save. It also fits poorly if you want to reinvest most earnings, need flexible ownership, or plan to raise venture capital, which favors a C-corp. There is a rough profit threshold below which it is not worth it, and we run your numbers, and the entity comparison, before you elect rather than after.

Yes. You revoke by filing a statement with the IRS, typically effective from the start of the tax year if filed early enough, which returns you to default taxation. There are timing rules and a general wait before you can re-elect, so it is not a switch to flip casually. If your situation changes, we help you revoke cleanly and understand the consequences before you do it.

No, and this is the common misconception. An LLC can elect S-corp taxation while staying an LLC, keeping its simpler structure and New York formalities. You do not have to become a corporation to get the tax treatment. Converting to an actual corporation is a separate decision usually driven by fundraising, not taxes. We keep your New York LLC and just change how the IRS taxes it.

The IRS generally processes Form 2553 within about sixty days and sends a CP261 notice confirming acceptance, though busy periods run longer. The election is effective as of the date you requested, not the approval date, so once filed on time you can operate as an S-corp while you wait. We track the acknowledgement and follow up if it does not arrive so nothing falls through.

You are not necessarily out of luck. The IRS provides late-election relief: if you had reasonable cause for missing the window and otherwise qualified, you can still file Form 2553 with an explanation, often up to a few years back. It is more paperwork than filing on time, but it frequently succeeds. If you missed the deadline, we help you pursue the late election rather than waiting a full year.