S-corp Analysis

“How do I pay less tax?” is the most common question I am asked by my business owner clients. Converting to an S-corporation is often an answer. It is not a universal panacea for high tax problems, as under certain circumstances this solution will lead to terrible tax results down the road. To help business owners make the right decision we do the analysis. What is the dollar amount benefit of converting from Sole proprietor or Single Member LLC form to an S-corp vs. additional costs for administration of an S-corp. A benefit is calculated by comparing the last filed tax return to a tax return based on the same numbers with an S-corp structure. Self-employment tax, income tax and entity level tax are compared to derive net tax benefit amount. Costs of administering an S-corp include initial set up fees, payroll processing, additional bookkeeping and tax return preparation fees, annual taxes. Once the totals are calculated, the picture becomes clear and the choice more obvious.

Clients’ industries we have seen benefit from S-corp conversion are E-commerce, Manufacturing, Construction and Professional services.

Our fee to run this analysis is $200. Deliverables include:

  1. Excel summary comparing current business structure tax expense to S-corp structure tax expense.
  2. S-corp structure individual tax returns, prepared based on an assumption of income flowing through an S-corp rather than Schedule C.
  3. Description of additional costs to administer S-corporation structure.