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.
Everything we deliver as part of this service.
Each item below is performed by our team and confirmed in your dashboard. State filing fees are passed through at cost as a separate line item.
- IRS Form 2553 preparation with all required information and member/shareholder consents
- Eligibility verification (US-citizen owners only, 100-shareholder cap, single class of stock)
- Effective-date analysis to determine the earliest available tax year
- Late-election relief under Rev. Proc. 2013-30 if you missed the March 15 deadline
- Reasonable-salary analysis based on your industry, location, and role (for audit defense)
- State-level S-Corp election filing in states that require a separate election (NY, NJ, others)
- Form filed via certified mail with USPS tracking, plus electronic CCC code submission where allowed
- Payroll setup coordination so you can immediately start running W-2 wages
- Document vault storage of Form 2553 and the IRS acceptance letter (CP261)
- Compliance Suite tracking your new Form 1120-S filing deadline (March 15 annually)
- Entity name, EIN, and date of formation
- Tax year you want the election effective (current year or following year)
- Member or shareholder names, SSNs, and ownership percentages
- Consent of all shareholders or LLC members (we collect electronically)
- Confirmation all owners are US citizens or resident aliens
- Single class of stock confirmation (no preferred or special-rights interests)
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
“The math was obvious once they ran the numbers. My single-member LLC was netting around $180k. We elected S-Corp in March, set up the payroll, and I saved $11,000 in self-employment tax that first year. The Form 2553 came back accepted with zero questions.”
The File.Business Promise
If we miss a filing deadline on a service you pay us to manage, we pay the state penalty. If you change your mind in the first 60 days, we refund our service fee in full. Your data stays yours, always.
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?
Does S-Corp election affect QSBS treatment?
Pair this with the services that follow.
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 →Form a Corporation and elect S-Corp status.
Form the entity in our guided flow, then file Form 2553 for S-Corp tax treatment. We confirm eligibility and handle the IRS submission.
From "I want to start a business" to fully compliant in five steps
Each step has a target time, a status indicator, and a clear owner. We do most of it. You sign and approve.
Pick name + state
Instant name availability across 51 jurisdictions. Our quiz suggests the right state if you are unsure.
Articles of Organization
$0 service fee. State fee at cost. Same-day in DE, WY, NV, FL, TX. Other states in 5 to 15 business days.
EIN from the IRS
Free, filed direct with the IRS. International founders without SSN: we fax Form SS-4 and get your EIN in 4 business days.
Open business banking
Mercury, Relay, Chase, or Brex. Pre-filled with your formation documents. International-founder accounts at Mercury and Relay.
Stay compliant
Annual reports auto-filed in all 51 jurisdictions. BOI tracking for foreign-owned entities. Penalty-free guarantee on Pro+.
On the $129/yr Compliance Annual Filings plan, we cover state late fees.
When you autofile your annual report through the $129/yr plan and we miss the deadline, we pay the state's late fee. The guarantee applies to that specific plan and the filings it includes. Other File.Business services are billed at the prices on this page.
Four steps from request to delivery
File.Business runs your filing on a single concierge workflow. You provide what we need; we handle the rest.
Tell us what you need
2-minute intake. We confirm the filing type, jurisdiction, and any supporting documents required.
We prepare the filing
Our specialists draft the document, validate against state requirements, and queue for your review where required.
We submit to the state
Filed through the state portal. We pay the state fee, track the submission, and resolve any state correspondence.
Confirmation in your vault
state-required document delivered to your SOC 2 encrypted document vault, with deadline tracking for the next filing.