Start Here: S-Corp
You filed (or are about to file) Form 2553. From here forward you owe yourself a W-2 salary that's reasonable for the work you do, the rest comes out as distributions, and the business files Form 1120-S with K-1s to each owner. Reasonable comp is the #1 audit issue.
Last reviewed:
Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from a qualified CPA, Enrolled Agent, or tax attorney, or contact the IRS. Read our editorial scope →
Your essential reading list
- Reasonable compensation — Watson v. Commissioner, Glass Blocks — what defensible looks like.
- LLC vs S-Corp election mechanics — Form 2553 timing, effective date, late election relief.
- Quarterly estimated taxes — Owners still need estimated payments on K-1 distributions.
Calculators you'll actually use
- Reasonable Compensation Calculator — BLS OEWS-anchored salary range with the Watson + Glass Blocks framework.
- Salary vs Distribution Calculator — Combined federal tax, FICA, and §199A QBI effects.
- LLC vs S-Corp breakeven — Sanity-check whether the election still pays at your income level.
- QBI §199A Calculator — S-Corp wages reduce QBI but enable the W-2 wage limitation.
- PTET Analyzer — S-corp PTET election in 36+ states — federal SALT-cap workaround.
Background guides
- Worker classification — Critical if you hire contractors alongside the owner W-2.
- Multi-state tax — Composite returns, PTE-tax stacking, owner credits.
- QBI §199A deduction — SSTB phase-out and the W-2 wage / UBIA limitation.
- QSBS §1202 — Not available to S-corps — read before re-electing to C-Corp.
Also useful
- California S-Corp overlay — 1.5% franchise tax minimum $800 — most expensive state to S-elect.
- New York S-Corp overlay — Separate NY S-election required; PTET interplay is delicate.
- Crisis signposting — If you missed payroll deposits or reasonable comp is wildly low.
What to do next
Set a defensible owner salary in the Reasonable Compensation Calculator BEFORE year-end. Most S-corp audits hinge on whether you can show your work for the salary figure.
Different situation? Back to all start-here paths.