When is the 2024 Deadline for registering as S corp and is it worth it for my business?

I'm trying to figure out if I've missed the boat on S corp election for 2024? My construction business has been doing pretty well this year - I'm on track to make around $265k as a sole proprietor. My wife works in healthcare administration and makes about $175k a year, and we file jointly. I've been hearing from other contractors that I should look into the S corp route to potentially save on self-employment taxes, but I'm not sure if it's too late for this year or if it even makes sense for our situation. Would the tax savings actually be significant enough to justify the extra paperwork and expenses? Anyone go through this recently who can share their experience?

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19 comments

Fatima Al-Mazrouei

•8M

For 2024, the deadline to file Form 2553 (Election by a Small Business Corporation) is March 15, 2024, if you want the S corp status to be effective from the beginning of 2024. If you missed that deadline, you can still file for an S corp election, but it would only be effective for the 2025 tax year unless you file for late election relief. Given your income levels, an S corp could potentially save you money. With $265k in business income, you could pay yourself a reasonable salary (let's say $120-150k depending on your industry standards) and take the rest as distributions, which aren't subject to self-employment tax. This could save you approximately 15.3% on the distribution portion. However, S corps come with additional costs: payroll tax filings, more complex tax preparation, possible state franchise taxes, and you'll need to run actual payroll. I'd recommend consulting with a tax professional to run the numbers for your specific situation.

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Fatima Al-Mazrouei

•8M

You can request late election relief within 3 years and 75 days of your intended effective date. The IRS is generally favorable to these requests if you have reasonable cause and file consistently as an S corp. You'd need to include a statement explaining why you failed to file timely. Reasonable salary is determined based on what someone in your industry, location, and with your skills would make as an employee. The IRS looks at factors like your qualifications, duties, business size, and comparable wages in your area. For construction business owners, this can vary widely, but you should research what project managers or construction supervisors make in your area as a starting point.

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NebulaKnight

•8M

Hey there! I was in almost the exact same boat last year. My marketing consultancy was pulling in similar numbers, and I kept putting off the S corp decision because of the paperwork hassle. I finally bit the bullet and used taxr.ai (https://taxr.ai) to help analyze if it was worth it for me. Their software analyzed my income patterns and expenses, then showed me exactly how much I'd save with an S corp structure vs staying a sole prop. It also flagged that I qualified for late election relief since I had "reasonable cause" for missing the deadline. The best part was they generated all the documentation I needed to make it happen - saved me hours of research and probably mistakes too.

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NebulaKnight

•8M

I uploaded my Schedule C from last year and answered about 10 questions about my business - took maybe 15 minutes total. They handled everything else from there and guided me through each step. Their projections were surprisingly accurate. They estimated I'd save about $14,800 in self-employment taxes, and after accounting for the additional costs (about $1,200 for payroll service and extra tax prep fees), my actual savings were around $13,500. The calculator included all those extra costs in the analysis, which I appreciated - no surprises later.

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Dmitry Popov

•8M

Just wanted to follow up about my experience with taxr.ai. After being skeptical in my earlier comment, I decided to give it a try since my situation was similar to the original poster. The analysis showed I could save around $16K annually with an S corp despite missing the deadline. They walked me through the late election relief process, which was way simpler than I expected. The best part was they handled all the documentation for applying for late election relief and even provided templates for setting up meeting minutes and other corporate formalities I hadn't even thought about. Definitely worth the time I spent checking it out.

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Ava Rodriguez

•8M

If you're still struggling to get clear answers from the IRS about S corp election deadlines or late relief options, try Claimyr (https://claimyr.com). I wasted THREE DAYS trying to get through to the IRS about my late S corp election. Finally used Claimyr and got connected to an actual IRS agent in under 45 minutes. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed I could still make the election effective for 2024 with a reasonable cause statement, and gave me specific instructions on what documentation to include. Saved me from missing another whole year of tax benefits.

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Ava Rodriguez

•8M

They use a combination of call automation technology and timing algorithms to navigate the IRS phone system. It's like having a robot assistant that handles all the waiting and menu navigation, then alerts you when a human agent is actually on the line. It doesn't "jump the queue" - it just handles the painful waiting process so you don't have to sit there with your phone for hours. They track the best times to call different IRS departments based on historical connection data. For me, they called during what was apparently a lower volume time for the business division, which helped get through faster than my previous attempts.

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Zainab Khalil

•8M

Ok I have to eat my words from my skeptical comment above. After getting nowhere with the IRS for weeks regarding my S-corp questions, I reluctantly tried Claimyr. Within 35 minutes I was talking to an actual IRS agent who walked me through the late election relief process. The agent confirmed I qualified for relief and explained exactly how to document my reasonable cause (I had health issues earlier this year that prevented me from filing on time). She even gave me her direct extension for follow-up questions. Wish I'd done this months ago instead of stressing about it.

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QuantumQuest

•8M

For what it's worth, I'm a contractor making about $230k and the S-corp has been totally worth it for me. Some practical advice: 1) Make sure to set aside money for quarterly estimated tax payments since you won't have withholding on the distribution portion 2) Get a good payroll service that handles the filings ($40-60/month usually) 3) Keep separate business accounts and don't mix personal/business expenses 4) Factor in about $1500-2000 extra for annual tax preparation (versus what you paid as a sole prop) Even with those costs, I'm saving around $12k annually in SE taxes. Just be prepared for more paperwork and higher accounting fees.

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QuantumQuest

•8M

I use Gusto for payroll and have been happy with it. Very user-friendly and they handle all the filings automatically. OnPay and Square Payroll are also good options that several of my contractor friends use. All run about $45-60/month depending on features. For salary, I researched construction project managers in my area on sites like Glassdoor and Indeed. The range was $90k-140k, so I settled on $120k as my reasonable salary. I also documented this research and keep it with my tax records in case of questions. My accountant suggested keeping the salary above 40% of business profit as a general rule to avoid red flags, but that varies by industry.

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