> S-Corp is significantly more work than a standard LLC.
Honestly - it's not. I pay Quickbooks ~$50/month where I click one button every month and it pays me my "salary" and then pays social security. I then pay my accountant to do all of the tax prep (which I would do S-Corp or not).
I suppose it depends on the setup of the business so I shouldn't make a blanket statement that S-Corps are more work for everyone. For me specifically, after 13 years with standard LLCs, it's definitely more work. The bulk of it being the initial setup, but there is still quite a few additional monthly tasks.
- The change to a W-2 employee for my partner and I meant setting up a proper accountable plan for expense reimbursement. So submitting expenses to the company, recording proof of purchase, etc. and that being processed as non-taxable income via payroll.
- We had to switch from our individual SEP IRAs and setup a Solo 401K. Not a huge deal to set up, but definitely more work as contributions on the employee and employer side are both done manually every month for each of us.
- Instead of a single check per month now there is compensation via payroll and I have to separately calculate and process the distributions for each of us afterward.
- HSA and medial insurance reimbursement is a total pain. We use Gusto and we have to have them make a manual adjustment to the W-2s at the end of the year in order for them to accurately reflect this reimbursement as it can't run through the accountable plan and their system cannot properly process this type of reimbursement. I actually had to have them issue my W-2 3x this year because they did it wrong the first two times. This is another perk of the S-Corp that I forgot to mention earlier though as healthcare reimbursements are counted as W-2 income, but are not subject to FICA taxes. So that increases the income eligible for contribution to the 401K without FICA being paid on it. $7,000 is the 2019 limit for HSA (for a family) and the health insurance is whatever it is in addition to that.
- The setup was definitely a major hassle for me. We had to register with various city and state agencies even though we are exempt from many of those taxes as owner/employees. It took us around six weeks in total to set all of this up.
- One last addition. In order to divert more pre-tax dollars into investments I hired my wife to help part time to work enough to max out her employee contribution to her 401K and then the company adds 25% to that since all employees must have the same employer contribution through a solo 401K. That's not specific to an S-Corp, but it is a good way to save another chunk of pre-tax money for those that are married and in a position to do so.
Honestly - it's not. I pay Quickbooks ~$50/month where I click one button every month and it pays me my "salary" and then pays social security. I then pay my accountant to do all of the tax prep (which I would do S-Corp or not).