Stop Overpaying 15.3% Self-Employment Tax.
Structure Your S-Corp, Reasonable Compensation & State PTET With a Licensed CPA.
If you are operating a profitable LLC or Schedule C consultancy without an S-Corporation tax architecture, every dollar of net profit is hit with self-employment payroll taxes. We model your exact crossover point, execute retroactive Form 2553 elections, and coordinate entity + personal returns year-round.
60 minutes directly with Imran Baig, CPA · $350 fee credited toward your engagement
Five Levers That Turn an LLC Into a High-Efficiency S-Corp.
Filing Form 2553 is only step one. The real tax savings come from calibrating your W-2 salary, QBI deduction, retirement contributions, and state PTET elections together.
Late Retroactive Elections (Rev. Proc. 2013-30)
Missed the March 15 S-Corp election deadline? We prepare late Form 2553 packages with statutory Reasonable Cause statements so you can capture S-Corp tax savings retroactively back to January 1.
Audit-Defensible Reasonable Compensation
Set your salary too high and you overpay payroll tax; set it too low and the IRS reclassifies distributions as wages with penalties. We calculate the exact mathematical sweet spot backed by market data.
State PTET ($10k SALT Cap Workaround)
In IL, NY, NJ, CA, and 30+ other states, we elect Pass-Through Entity Tax (PTET) under IRS Notice 2020-75—converting non-deductible personal state taxes into a 100% deductible business expense.
Section 199A QBI Deduction Optimization
Above the income phase-out thresholds, your 20% Qualified Business Income deduction depends on W-2 wages paid by your S-Corp (the 50% W-2 wage test). We model salary + QBI simultaneously.
Solo 401(k) & Cash Balance Plan Stacking
Pair your S-Corp W-2 salary with a Solo 401(k) ($23,500 employee deferral + 25% employer profit sharing up to $70,000) or a Defined Benefit Cash Balance Plan to shelter $100k–$250k+ pre-tax.
Accountable Plan & Augusta Rule (IRC § 280A(g))
Reimburse home office, business mileage, cell phone, and equipment tax-free through a formal corporate Accountable Plan—unlike unreimbursed employee expenses, which are disallowed personally.
S-Corp & State PTET Savings Calculator
Slide your annual net business profit, add any W-2 wages (accounting for the Social Security OASDI cap), and toggle State PTET to see your real-time net annual and 5-year tax savings.
S-Corporation Election & Tax Strategy FAQs
At what profit level does an S-Corporation election start saving money?
Generally, once a sole proprietorship or single-member LLC generates $85,000 to $100,000+ in consistent net annual profit, the self-employment tax savings (15.3% Social Security and Medicare up to the OASDI cap, plus 2.9%–3.8% Medicare above the cap) outweigh the additional payroll and Form 1120-S compliance costs.
Can I still make an S-Corp election retroactively for the current or prior tax year?
Yes, in many cases. Under IRS Revenue Procedure 2013-30, if your LLC missed the March 15 deadline to file Form 2553, a CPA can prepare a Late S-Corporation Election with a compliant Reasonable Cause statement, allowing retroactive S-Corp treatment up to 3 years and 75 days after the intended effective date.
What if I already have a high-paying W-2 day job and run a side consulting LLC?
If your W-2 day job already exceeds the Social Security OASDI wage base ($176,100), your LLC profit is only subject to the 2.9% Medicare + 0.9% Additional Medicare Tax (3.8% total) rather than the full 15.3%. However, forming an S-Corp disables the Social Security cap coordination on the employer 6.2% FICA side! That is why we always run a precise W-2 + S-Corp crossover model before electing.
What is the Pass-Through Entity Tax (PTET) SALT cap workaround?
Federal law caps personal state and local tax (SALT) deductions on Schedule A at $10,000. Over 35 states (including IL, NY, NJ, CA, CT, and MA) allow S-Corporations and partnerships to elect to pay state income tax at the entity level (PTET). Under IRS Notice 2020-75, entity-level PTET payments are 100% deductible against federal business income, bypassing the $10,000 SALT cap.
Model the Tax Impact Before You Make the Move.
Book a 60-minute S-Corp Strategy Session with Imran Baig, CPA. We will model your exact Reasonable Compensation, QBI impact, and state PTET savings, and deliver a written implementation plan. Your $350 fee is credited toward your engagement.
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Imran Baig, CPA · Illinois Licensed CPA · Entity & Tax Strategy Nationwide