LLC + S Corp

What is an S Corp election?

An S Corp election changes the way your business is taxed and could save you thousands. Along with those potential tax benefits, this structure delivers the same flexibility, credibility, and protections of an LLC.

What are the advantages of an S Corp?

Forming an LLC and taking an S Corp election makes your business eligible for special pass-through taxation status with the IRS.

Avoid the dreaded double taxation.

Pass-through taxation means only shareholders pay tax on their portion of profits.

Secure limited liability protection.

Provides peace of mind by separating your personal and business assets.

Get the perks of paying yourself.

This structure can help limit tax liability related to Social Security and Medicare.

Tax implications for your business:

Because an S Corp uses an income-based tax rate, you may be able to enjoy a lower tax burden compared to other corporate structures. [Visit our resource center to learn more about/Use our tax calculator tool for a personalized view of] how forming an LLC with an S Corp election could help you realize potential tax savings.

Other considerations

You’ll need to begin paying yourself and potentially others as employees. This means you’ll have to adhere to payroll filing requirements. Don’t worry, we can help with that too.

An S Corp election is only available for U.S.-based companies who will have no more than 100 owners/shareholders — all of which must be U.S. citizens or residents.

LLC requirements like annual report filing, quarterly tax payments generally required, other formalities depending on state.

Just need an S Corp election?

If you already have an entity and want to take an S Corp election, we can help! Simply select LLC + S Corp and indicate you already have a business entity. We’ll complete your S Corp election form for you to sign and submit.

Get started in minutes.

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Tell us about your business.

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

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Let us do the work.

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

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Get excited!

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

Not sure if an LLC + S Corp is for you?

Answer a few quick questions, and our Help Me Choose tool can help you move closer to finding the right business structure fit.

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 Corporation 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. Important: for existing entities, the election must generally be made by March 15th of the year the election is to be effective.

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.

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 an 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.

The main difference in the way the business is taxed. C Corp are taxed twice — the business pays taxes, as do the shareholders on their profits. When a business takes an S Corp election, only the shareholders pay taxes on their profits.

Read on to learn more detail about different business structures.

Block Advisors pricing for business formation starts at $149, which includes state formation, basic documentation, and an EIN. State filing fees are charged separately in addition to our fees and vary from state to state. If you have a question about a specific state, feel free to contact us at 877-472-1095. In addition, there will likely be other costs associated with starting your business, such as opening bank accounts, additional accounting or tax preparation fees, insurance, or obtaining a business license.

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.

  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.