When is an S-corp not worth it?

When net income is under roughly $50,000 (savings are eaten by payroll and return costs), when you need flexibility in equity splits, or when your industry's reasonable salary leaves little room for distributions.

Can I make the election late?

Yes. Rev. Proc. 2013-30 allows late election relief up to 3 years and 75 days after the intended effective date if you have reasonable cause. Most CPAs handle this routinely.

What is a reasonable salary?

Wages comparable to what a third party would pay for your role and hours. The IRS looks at industry data, your experience, and the size of distributions. There is no fixed percentage rule.

S-Corp Election Help: When and How to File Form 2553

An S-corp election (Form 2553) lets an LLC or corporation pay owners a reasonable salary and take the rest as distributions, saving on self-employment tax. The election is generally worth it once net income clears about $80,000, requires monthly payroll, and adds a separate 1120-S return that typically costs $1,200 to $3,500.

The S-corp election is one of the most common tax moves for profitable single-owner businesses, and one of the most commonly oversold. It works when net income comfortably exceeds the salary a comparable employee would earn in your role, you can run payroll, and you accept the added compliance cost of a separate corporate return. A CPA will run the breakeven specific to your numbers, file Form 2553 (including late election relief under Rev. Proc. 2013-30 if you missed the window), set the reasonable salary using comparable wage data, and set up payroll. Done well, the savings compound. Done poorly, an unreasonably low salary triggers IRS reclassification and back payroll taxes.

What's typically involved

We're expanding this page with the full playbook for s-corp election: elections to make, common mistakes generalists miss, fee expectations, and the specific credentials to look for. In the meantime, the matching form below routes your situation to a CPA whose practice fits.

What CPA work looks like at the fee level

Service	Typical 2026 range
CPA hourly rate	$150 to $450 / hour
Schedule C (sole proprietor)	$190 to $800
Single-member LLC return	$300 to $1,500
S-corporation return (1120-S)	$1,200 to $3,500
Partnership return (1065)	$1,000 to $5,000+
C-corporation return (1120)	$1,500 to $4,000+

Disorganized records ("shoebox" engagements) typically increase fees by 1.5x to 2.0x.
Each additional K-1 partner usually adds roughly $300 to $500.
Ranges reflect entity type, bookkeeping state, and complexity. Quotes vary by region and CPA experience.

Full table with methodology lives in the 2026 CPA Compass Fee Benchmark.

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TaxProMatch is an independent matching resource. We are not a CPA firm and do not provide tax, legal, or financial advice.