Business formation

You could save thousands on your taxes.

As a sole proprietor, all your profits are subject to self-employment tax. By registering your business and making an S Corp election, you could change that. Get started in just 10 minutes.

Why register your business with Block Advisors?

Forming your business with us will free up time and relieve stress so you can focus on what’s next. And, you’ll have access to small business tax experts, professional bookkeeping and payroll support all under one roof. Registering your business to be an S Corp, C Corp, or LLC with us could have many benefits like:

Get started in minutes.

step 1 towards forming a business

Tell us about your business.

Enter your business info, pick your business type, and fill out our forms in as little as 10 minutes.

step 2 towards forming a business

Let us do the work.

Get back to business as we work with the state to file your paperwork with 100% satisfaction guaranteed.

step 3 towards forming a business

Get excited!

You’re official! We’ll provide you with your business documents while you change your title to CEO.

It could pay to register your business.

Forming your business could help put money towards your bottom line during tax time. Below are some scenarios where you’ll see examples of how to potentially save on taxes by making an S Corp election.

 

Real estate agent

Let’s say you own a real estate business that makes around $50,000 in profit a year. If you convert that business to an S Corporation, you can use the money saved to create extra marketing materials!

  • Saved $3,240

Bike shop owner

Perhaps you own a bike shop that makes around $80,000 in profit a year. If you convert the business to an S Corporation, you can put the money saved into hiring seasonal staff!

  • Saved $5,069

 

Explore our business formation product options.

S Corp

C Corp

Pass-through taxation means you are only taxed once at the owner level vs. a corporate tax level
Pass-through taxation means you are only taxed once at the owner level vs. a corporate tax level
Pass-through taxation means you are only taxed once at the owner level vs. a corporate tax level
Pass-through taxation means you are only taxed once at the owner level vs. a corporate tax level

Varies

Registering your business separates your personal assets from your business.
Registering your business separates your personal assets from your business.
Registering your business separates your personal assets from your business.
Registering your business separates your personal assets from your business.
Shareholders
Shareholders

Up to 100

Shareholders

Unlimited

Shareholders

Unlimited

Flexible management structure
Flexible management structure
Flexible management structure
Flexible management structure
Ease of ownership changes
Ease of ownership changes

Varies

Ease of ownership changes
Ease of ownership changes

Varies

Payroll, bookkeeping, and other ongoing formalities
Payroll, bookkeeping, and other ongoing formalities
Payroll, bookkeeping, and other ongoing formalities
Payroll, bookkeeping, and other ongoing formalities

Varies

State formation fees
State formation fees
State formation fees
State formation fees
Annual state compliance requirements to keep your business in good standing
Annual state compliance requirements to keep your business in good standing
Annual state compliance requirements to keep your business in good standing
Annual state compliance requirements to keep your business in good standing

We’ve got the expert insights your business needs.

Check out our resource center to learn more about taking your business from self-employed to an LLC, C Corp, or S Corp.

Why is choosing the right business entity important?

The type of business you choose is critical as it affects everything from the taxes you pay to different liabilities.

LLC vs. S Corp: What tax implications are there for my business?

As you start a new business, you must decide on a legal business entity. While many options exist, many business owners debate LLC vs. S Corp.

LLC vs. C Corp: What’s the difference for my taxes?

As you contemplate what to register your business under, you might come across two options: An LLC and a C Corp. We can help you understand both.

Frequently asked questions.

Business entities come with a variety of tax benefits. Depending on your business, you could save thousands in taxes by taking the S Corp election. There are several steps involved. To be treated as an S Corp, after forming a corporation or LLC, the shareholders must make an election with the IRS. In addition, you will need to pay yourself a reasonable salary as a W2 employee and set up payroll and withholding. If your business is profitable, your payroll taxes and income tax from this salary may be offset by the savings you achieve on the self-employment tax. In general, if you make at least $40,000 in profit, you could see savings from this tax election when you file taxes in the year after you take the election. Important: the election must be made by the due date of the return for the year prior to the year the S Corp election is to take place.


In addition, a business generally can deduct the expenses directly related to its business activity — think advertising expenses, mileage, or professional services like what Block Advisors provides. Business credits for things like renewable energy, employee retirement plan, or health insurance may also be available depending on your circumstances. These credits would reduce a tax bill dollar for dollar.


The decision to form a business entity and take an S Corp election is an important one that includes many additional considerations. For example, as the owner of a business, you also need to ensure your business financials are maintained and updated (if you’re not already) and stay on top of annual business filing and other requirements depending on your state and industry. You may want to seek the advice of an attorney to evaluate these considerations. Our products, services, and advice are not a substitute for an attorney, and we do not provide legal advice or perform services performed by an attorney.


Here’s a great article detailing potential incorporation tax benefits for small businesses.

How you choose a business structure depends on a lot of things. Each structure comes with its own specific rules, requirements, and considerations. The most common types of businesses are:

  • Sole Proprietorships
  • S Corp
  • C Corporations

Read on to learn more detail about different business structures.

An EIN is an employer identification number and is needed in certain situations. For example, partnerships and corporations are required to have an EIN. Sole proprietorships and LLCs that have employees, pay excise tax, or contribute to a retirement plan also need an EIN. EINs are included with all of our packages.

An S Corp is a tax election for a small business corporation or LLC that allows the company to pass its income, loss, deductions, and credits through to its owners. The company itself is not subject to tax. And that income is subject to the shareholder’s individual tax bracket, which may be lower than self-employment tax.


To take the S Corp election, you’ll need your original business filing documents (either as an LLC or corporation) and an employee identification number (EIN). For an LLC, you will need to have “checked the box” to be taxed as a corporation. You will then file Form 2553, Election by a Small Business Corporation, with the IRS. If you select our S Corp product, we’ll take care of that for you.


While an S Corp election can help reduce your tax liability, there are a few extra steps you’ll need to do as part of your business operations. One of the biggest is making sure you’re drawing a reasonable salary and filing the necessary quarterly payroll and tax forms. You’ll also need to ensure your business financials are maintained and updated, as well as annual business filing requirements depending on your state and industry.

A limited liability company, or LLC, is a business structure that can limit liability to the owners or members of the LLC. This can help protect owners from certain debts or liabilities of their business. For tax purposes, a single-member LLC can file as a sole proprietor or choose to take an S Corp election. A multi-member LLC can be structured as a partnership or an S Corp.


Check out this article to learn how an LLC is taxed.

Often a sole proprietor means someone who operates a business but reports the income on their individual taxes and doesn’t have a separate legal entity. LLCs are a legal entity that can provide personal liability protection, even if still owned by a single person. In other words, it can protect the owner’s personal assets from certain business debts or liabilities. Sole proprietors and single member LLCs are taxed in the same way, unless another tax structure (like an S Corp) is elected.


Check out this article to learn more about how a sole proprietor is taxed.
Check out this article to learn how an LLC is taxed.

Most traditional corporations like the ones that are traded on the stock market are C Corp. A C Corp is a tax status that is subject to double taxation (see below) — the C Corp pays tax on its income and the shareholders pay tax on the dividends they receive from the corporation. The corporate tax rate is less than the individual tax rate.

A nonprofit is a business structure that has requested tax-exempt status from the state and/or IRS. The nonprofit does not pay tax on its income provided the income is from activities associated with the nonprofit’s charitable purpose. Examples of nonprofits can range from charities to your kids’ local sports club.

  1. Potential savings based on estimated tax savings of sole proprietor (Schedule C) users with over $40,000 in profit in 2022 by taking an S Corp election and filing in 2023, net of salary payments and payroll taxes. Election must generally be made by the due date of the return for the year prior to the year the S Corp election is to take place. Savings requires payment of a reasonable salary. Other requirements apply, and additional fees like tax preparation and payroll services are not included. Individual tax savings will vary based on your circumstances. All tax situations are different. Taxes are only one consideration in determining whether to form a business. You may want to seek the advice of an attorney to evaluate all of the relevant considerations. Block Advisors Business Formation Products and Services provide automated online tools that you can use to help meet your business formation needs and are not tailored to your particular situation. See our FAQs for more information.
  2. The decision to form a business entity is an important one that includes many considerations. You may want to seek the advice of an attorney to evaluate all of the relevant considerations. Block Advisors Business Formation Products and Services provide automated online tools that you can use to help meet your business formation needs but are not specifically tailored to you or any particular situation.
  3. Example savings based on average estimated tax savings of sole proprietor (Schedule C) with $37,000 in profit in 2022 compared to a similar S Corp election paying a reasonable salary of $14,600. Savings are net of salary payments and payroll taxes. Additional fees like tax preparation and payroll services are not included. Individual tax savings will vary based on your circumstances. All tax situations are different.
  4. Example savings based on average estimated tax savings of sole proprietor (Schedule C) with $50,000 in profit in 2022 compared to a similar S Corp election paying a reasonable salary of $25,000. Savings are net of salary payments and payroll taxes. Additional fees like tax preparation and payroll services are not included. Individual tax savings will vary based on your circumstances. All tax situations are different.
  5. Example savings based on average estimated tax savings of sole proprietor (Schedule C) with $80,000 in profit in 2022 compared to a similar S Corp election paying a reasonable salary of $30,000. Savings are net of salary payments and payroll taxes. Additional fees like tax preparation and payroll services are not included. Individual tax savings will vary based on your circumstances. All tax situations are different.

We are not a law firm or attorneys and our advice, products, and services are not a substitute for those of an attorney or law firm. This site provides general information that should not be construed as legal advice.