What is S-Corp Election?
Definition
An S-Corp election is a tax status that an LLC or corporation can choose by filing IRS Form 2553. It allows the business to pass profits and losses through to the owners' personal tax returns while also allowing owners who work in the business to split income between salary (subject to payroll taxes) and distributions (not subject to self-employment tax). This can save business owners thousands of dollars per year in taxes. The election must be filed within 75 days of formation for calendar-year entities.
Real-World Example
A consultant earning $150,000 through her LLC elects S-Corp status, pays herself a $90,000 salary, and takes $60,000 as a distribution — saving approximately $9,180 in self-employment taxes compared to default LLC taxation.
Why This Matters for Lead Generation
The S-Corp election is the single most powerful outreach hook for CPAs targeting new LLC formations. The 75-day deadline creates genuine urgency, and the potential tax savings are large enough to justify professional fees. CPAs who contact new LLC owners within the first two weeks and mention the S-Corp deadline see significantly higher response rates than those using generic outreach.
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