S Corp status back to January 2021? No problem! The late S corp election can easily be done well into 2020 for 2019 as well (but there are things to work through)! How does this fit into S Corp vs LLC discussion? The S Corp election takes your LLC and changes the way it is taxed and reduces self-employment taxes.
Every year for well over 5 year, MILDRID ESUA, CPA successfully prepares and files about 100-120 Form 2553 S Corp elections with 100% success. Zero calories. No trans fats. Add a splenda to the tax savings, and it becomes Yum! Yeah, okay, we took it too far but you get the idea.
So if you are past the 75 days from January 1 or business inception, no worries- in true IRS fashion there is one rule (don’t be tardy), and fifty exceptions (my dog ate it). Form 2553 is no different, but filing it late has to be done correctly and we can help!
Late S Corp Election Advantages
As you know, being taxed as an S Corp has huge tax savings because you avoid self-employment taxes. Through an S Corp election you are limiting the amount of income subject to Social Security and Medicare taxes which are bundled to be called self-employment taxes. The savings is easily 8-10% of your net business income after expenses (based on 100,000 net biz income). In other words, if you earn $100,000 in net business income after expenses, your tax savings with an S Corp election could be $8,000 to $10,000. This is the big difference when considering the S Corp vs LLC discussion.
Late S Corp Election, $475 ($250 for timely elections)
Payroll Setup, $300-$450
Q4 Payroll Event and Tax Planning, $475 (or $250 if we skip tax planning)