S-corp readiness scorecard

Is your business ready
for an S-corp?

Eight yes/no questions, drawn from the rules on our S-corp election page, tell you whether the election is worth it yet, or what has to change first.

Take the scorecard

Eight questions

1. Is your profit steady, not a one-off year?
2. After paying yourself a fair salary, is real profit left over, typically $60,000–$80,000 or more a year?
3. Are you ready to run payroll and keep clean monthly books?
4. Are all owners eligible, with one class of ownership?
5. Is the business losing money, or brand new?
6. Does your income swing widely from year to year?
7. Do you plan to raise venture capital?
8. Is any owner a non-US resident, or another company?
Your verdict

Enter your email to see whether an S-corp election is worth it yet, and what to do next.

We'll show your verdict here, and Jeff will follow up by email a couple of times. Unsubscribe anytime. Privacy

What the verdict means

Likely yes means all four of the page's conditions hold: steady profit, real profit left after a fair salary, you're ready for payroll and monthly books, and the owners qualify. Worth running the numbers means the profit is there but something else isn't settled yet. Not yet means one rule stops it for now, and the verdict says which.

What changes after you elect

  • •Payroll: withholding, quarterly filings, W-2s
  • •A separate business return (Form 1120-S, due March 15) and a K-1 for each owner
  • •A reasonable salary, set from industry pay data and documented, before any distributions
  • •Hard to undo: once you end the election, the IRS generally won't let the business elect S-corp status again for five years

S-corp consulting for our bookkeeping clients

We offer S-corp consulting to our bookkeeping clients only. For them, we work out whether and when to elect, set a reasonable salary you can defend, run the payroll and its filings, and keep the books reconciled every month, so the 1120-S is ready when your CPA asks for it. If you'd like our help, please start with a free bookkeeping estimate.

Common questions

At what profit does an S-corp election make sense?
Usually once steady profit reaches about $60,000–$80,000 or more, leaving real profit after a fair salary. In a state that taxes S-corps, the break-even is higher.
What does an S-corp cost to run?
Our examples assume about $2,000 a year for payroll service and the extra business return. At $50,000 of profit it costs more than it saves.
What's the deadline to elect S-corp status for 2027?
Monday, March 15, 2027, for a calendar-year business. Late-election relief is available in some cases under Rev. Proc. 2013-30.
Can you help me decide whether to elect?
Yes, if you're a bookkeeping client. We offer S-corp consulting to our bookkeeping clients only: whether and when to elect, a reasonable salary, payroll, and books ready for the 1120-S. Start with a free bookkeeping estimate.
Why do you ask for my email?
So we can show you the verdict and follow up about what the election would take for your business. You'll get a couple of follow-ups from Jeff. Unsubscribe anytime.

Related

An S-corp is a payroll decision
as much as a tax one.

Our S-corp consulting is for bookkeeping clients. For them, we say plainly whether the election is worth it, and what it takes to run. Start with a free estimate.

Educational, not professional advice. This verdict uses the answers you gave and the rules on our S-corp election page, federal only, and doesn't account for your full situation. We give that advice to our bookkeeping clients. To become one, get a free estimate. Invisible LLC isn't your accountant until we have an engagement letter.

  • States and cities treat S-corps differently; the page names the two biggest exceptions.
  • The verdict is a starting point, not tax advice.