What is a S-Corporation?
S-Corps allow companies to divide income between dividends and personal income.
Dividends are taxed at a much lower rate than personal income. With a pure LLC, you are taxed only on personal income.
Difference of S-Corp vs. C-Corp
S-Corps have more restrictions on # of shareholders, who can be a shareholder, and how many types of stock you can offer.
Venture Capital/Stock Market
Most venture-backed companies/public companies are C-Corporations due to the stock restrictions of S-Corporations.
Why combine a LLC + S-Corp?
Flexibility of a LLC
LLCs are less complicated to set up and maintain than corporations.
Tax Savings of S-Corp
LLCs can elect any tax status (sole proprietor, C-Corp, S-Corp). By electing S-Corp tax status, LLCs can split their taxable income into dividends and personal income. Dividends are taxed at a lower rate.
Federal and State Impact
Most states respect the federal S-Corp election and this leads to less state income tax for the business.
What are the drawbacks?
No foreign investors. Limit of 100 stockholders. Only 1 class of stock (rules out Venture Capital investors).
The IRS has more rigorous auditing of S-Corp elections and requires more robust accounting.
60 Month Lock
Once you elect S-Corp status, you are locked into that election for 60 months.
Only LLC + S-Corp Option in the Market
Our competitors support forming S-Corporations but they don't support LLCs electing S-Corp status. You should enjoy flexibility while also saving money on taxes.
We walk you through each step of electing S-Corp status. Our job is to help you make the best decision for your business.
The Features You Need
LLC State Filing. IRS EIN. Federal and State S-Corp Filings. Registered Agent. Customized Operating Agreement.
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Learn more about the specifics of S-Corps and how to elect S-Corp status as an LLC.
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