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S-Corp formation · San Jose · Registered LDA #268
S-Corp Formation in San Jose — stop paying self-employment tax on every dollar
As a sole proprietor or default LLC, you pay 15.3% Social Security and Medicare tax on nearly all of your profit. With an S-Corporation, that tax applies to a reasonable salary you pay yourself, not to the rest of the profit — for steady earners, often thousands of dollars a year. We form your LLC or corporation with its EIN for $600 plus the state fee and prepare your Form 2553 election.
In our San Jose office or remotely · English, Vietnamese and Cantonese · Spanish through our staff
- Entity formed and initial Statement of Information filed
- Federal EIN obtained from the IRS
- IRS Form 2553 S-Corp election: $100 add-on
- Operating Agreement from $300 · Bylaws from $500
What is an S-Corp, and how do I get one in San Jose?
An S-Corporation is not a separate type of company. It is an IRS tax election, made on Form 2553, by an eligible LLC or corporation. TruPoint Legal, a registered Legal Document Assistant (LDA #268) in San Jose, forms the LLC or corporation with its EIN for $600 plus the state filing fee and prepares the Form 2553 election as an add-on. The election is due no more than 2 months and 15 days after the start of the tax year it should cover. California follows the federal election and charges S-Corporations 1.5% of California net income, with an $800 minimum.
How an S-Corp lowers your tax
An illustration only, not tax advice. Your numbers depend on profit, a salary the IRS would consider reasonable, and payroll costs.
| $100,000 net profit | Sole proprietor or default LLC | S-Corp with $60,000 salary |
|---|---|---|
| Income subject to Social Security and Medicare tax | About $92,350 (self-employment) | $60,000 (payroll) |
| Social Security and Medicare tax at 15.3% | About $14,130 | About $9,180 |
| Difference | — | About $4,950 a year |
| Costs to weigh against it | — | Payroll service, a separate S-Corp return, California’s 1.5% S-Corp tax |
Before you elect, have a tax professional run your own figures. Our same-office sister company, Fingerscan Digital Inc., offers tax planning and prepares S-Corp returns (Form 1120-S and California Form 100S).
Who usually looks at an S-Corp
Steady net profit
Contractors, consultants, IT professionals, real estate agents and trades with consistent profit after expenses.
Owners already running an LLC
An existing LLC can elect S-Corp treatment without forming a new company, if it meets the deadline.
LLC formation →Corporations avoiding double tax
A corporation that pays out its profit can pass income through to shareholders instead of being taxed twice.
Incorporate →Where do-it-yourself S-Corps go wrong
| DIY mistake | What it costs you | With TruPoint |
|---|---|---|
| Form 2553 filed after the deadline | S treatment lost for the year, or a late-election relief request | Election prepared with your formation |
| A shareholder or spouse does not sign the consent | Election invalid | Every required signature identified for you |
| Ineligible owner added later | S status terminates | Shareholder agreement transfer limits available |
| No payroll set up for the owner | IRS can treat distributions as wages, with penalties | Tax side coordinated through Fingerscan Digital Inc. |
S-Corp questions
How much can an S-Corp save me?
It depends on profit, a reasonable salary and payroll costs. As an illustration, an owner with $100,000 of net profit who pays a $60,000 salary through an S-Corp owes Social Security and Medicare tax on the salary instead of on nearly all profit, roughly $4,950 less, before payroll service costs, the extra tax return and California’s 1.5% S-Corporation tax. Have a tax professional run your own numbers.
When is the S-Corp election deadline?
IRS Form 2553 must be filed no more than 2 months and 15 days after the beginning of the tax year the election is to take effect. For a new company, that clock starts when the company begins its first tax year. It can also be filed at any time during the year before the year it should take effect.
Should my S-Corp be an LLC or a corporation?
Either can elect S-Corporation tax treatment, and the choice is yours. An LLC keeps LLC governance under an operating agreement; a corporation uses bylaws, a board and shares. Both pay California’s 1.5% S-Corporation tax with an $800 minimum.
Does California need a separate S-Corp election?
No. California recognizes a valid federal S election. The company files California Form 100S each year and pays 1.5% of its California net income, with an $800 minimum.
Can an owner who is not a U.S. resident own an S-Corp?
No. S-Corporation shareholders must be U.S. citizens or U.S. residents for tax purposes, and the company may have no more than 100 shareholders and one class of stock. A nonresident owner can still own an LLC or C-Corporation.
Other business formation services
Keep more of what you earn
Form your company and prepare your S-Corp election in one visit. $600 plus the state fee, EIN included.
TruPoint Legal LLC · Registered Legal Document Assistant LDA #268, Santa Clara County · CALDA member. We are not a law firm and do not give legal advice.