Why Change from an LLC to an S Corp?
An LLC offers flexibility and protection, but as your income grows, self-employment taxes can eat into your profits. By electing S corp status, you can:
✅ Reduce self-employment taxes
✅ Pay yourself a reasonable salary (and save on payroll taxes)
✅ Keep liability protection and flexibility
How to Change Your LLC to an S Corp: Step-by-Step
Step 1: Check Your Eligibility
  • U.S.-based LLC
  • Under 100 shareholders
  • Shareholders must be U.S. citizens or residents
  • Only one class of stock
Step 2: File IRS Form 2553
  • Download IRS Form 2553: Election by a Small Business Corporation.
  • File it within 75 days of the start of your tax year to be effective for that year.
Step 3: Update Your Payroll
  • Switch from self-employment income to W-2 wages for yourself.
  • Work with a payroll service or accountant to ensure compliance.
Step 4: Adjust Your Bookkeeping
  • Track payroll separately from business income.
  • Update your accounting software to reflect these changes.
"A small business is an opportunity to build a life, not just a living."
Examples:Example 1:
ABC Marketing LLC is a small agency making $150,000 in net income. By switching to S corp status, they can pay the owner a $60,000 salary and the remaining $90,000 as profit distributions—saving thousands in self-employment taxes.
Example 2:
Green Thumb Landscaping LLC made $80,000 last year. After converting to an S corp, they pay the owner $40,000 as salary and take the rest as distributions—cutting their tax bill by about 15%.
Key Takeaways
✔️ S corp status can lower your tax burden
✔️ Filing IRS Form 2553 is crucial
✔️ Make sure you’re paying yourself a reasonable salary
✔️ Work with a CPA or accountant to stay compliant
Ready to Switch?
Changing your LLC to an S corp can be a powerful tool for growth. If you’d like personalized advice, contact your tax professional or book a consultation with our team today.
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