Should Your Business Be an S-Corp? A Practical Guide

Entity structure has dramatic tax implications. We break down when an S-Corp election makes sense and what the real savings look like for small business owners.

An S-Corp election can generate significant self-employment tax savings for profitable small businesses. When net profit exceeds roughly $40,000–$50,000 annually, the payroll split strategy often makes sense: pay yourself a reasonable salary (subject to SE tax), then take remaining profits as a distribution (not subject to SE tax). Key considerations: reasonable compensation requirements, payroll setup costs, additional state filing obligations, and S-Corp eligibility rules. White Crest advisors can model the exact savings for your specific situation.