What an S-Corp election actually does
An S-Corp is not a different kind of company — it is a tax election an LLC or corporation makes with the IRS. The reason owners make it is straightforward: as a sole proprietor or default LLC, all of your net profit is subject to self-employment tax. With an S-Corp, you pay yourself a reasonable salary that carries payroll tax, and the remaining profit can be distributed without that extra self-employment tax. Done right, that difference is real money.
The catch is in the details. The election has deadlines. The salary has to be genuinely reasonable — too low is a well-known audit trigger. And the election adds a payroll obligation and a separate business return. For the right business it is clearly worth it; for one that is too small, the added cost can outweigh the savings. The honest answer depends on your numbers.
When the election makes sense
As a rough guide, the math starts to favor an S-Corp once a business has steady net profit beyond what the owner would pay themselves as a reasonable salary. Before electing, it is worth weighing:
Our LLC vs S-Corp calculator gives you a side-by-side estimate to start from. The calculator owns the math; we own the judgment call about whether it fits your specific situation.
From decision to a correctly run S-Corp
The election is the easy part — most owners get into trouble afterward by setting the salary wrong or skipping payroll. We help you avoid both. For more on the salary question specifically, see our guide on setting a reasonable S-Corp salary.
Who this is for
This is for profitable sole proprietors, single-member LLCs, and growing businesses across Long Island — Nassau and Suffolk County — and New York City who suspect they are paying more self-employment tax than they need to. We also work with owners remotely nationwide. If you are not yet sure your business is at that level, start with the calculator and a conversation; there is no upside to electing too early.