Question 1

Will electing S-Corp lower my actual paycheck?

Accepted Answer

Your paycheck becomes the salary portion, with normal payroll withholdings. The rest comes through as distributions on whatever schedule you want. Total cash to you is the same; the timing and tax treatment are different.

Question 2

When do I have to file Form 2553?

Accepted Answer

New entities have 75 days from formation. Existing entities must file by March 15 of the year the election is to apply to. Late relief is available under Rev. Proc. 2013-30 within 3 years, 75 days.

Question 3

Can I undo an S-Corp election?

Accepted Answer

Yes, by filing a statement of revocation. The IRS will not let you re-elect S-Corp status for 5 years afterward.

Question 4

Do I need a separate bank account?

Accepted Answer

You needed one for the LLC already if you wanted the liability shield. With S-Corp election, the operational answer is the same — but the hygiene matters more, because payroll, distributions, and reimbursements all need to be traceable for the 1120-S return.

Question 5

What about health insurance?

Accepted Answer

S-Corp owners holding more than 2% of shares get a unique treatment: health premiums paid by the corporation are added to your W-2 wages (Box 1) but you take an above-the-line self-employed health insurance deduction to wash it out. Net effect: same as before, but the bookkeeping is fiddly.

Question 6

How does this affect my retirement contributions?

Accepted Answer

Solo 401(k) limits change. As a sole proprietor, your contribution base is your full SE income; as an S-Corp owner, it's only your W-2 salary. Set the salary too low and you cap your own retirement contributions.

Question 7

I have a regular W-2 job too. Does that change anything?

Accepted Answer

Yes — usually in S-Corp's favor at higher incomes. If your W-2 wages already exceed the Social Security wage base ($176,100 in 2025), you've maxed out the 12.4% SS portion, so the marginal SE tax on additional self-employment income is just 2.9% Medicare.

Question 8

Should I trust this number?

Accepted Answer

Trust it as a directional estimate, not a filing position. Tax law has more edge cases than a calculator can model — state-level pass-through entity tax elections, multi-state apportionment, fringe benefit rules, accumulated-adjustments accounting. A real CPA should sign off before you file Form 2553.