Tax Planning

Tax Selection for Business Entities

The entity you chose when you started your business may be costing you thousands of dollars every year. The right election at the right time fixes that.

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The Foundation

What Is Tax Selection for Business Entities?

Tax selection refers to the process of choosing how your business entity is taxed by the IRS and the state of Florida. An LLC, for example, can be taxed as a sole proprietorship, a partnership, an S-Corporation, or a C-Corporation. Each option produces a dramatically different tax result.

Most business owners choose their entity structure based on liability protection and never revisit the tax election. As income grows, that default election often becomes one of their largest and most avoidable expenses.

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Watch: Entity Tax Elections Explained

Key Distinction

Your Entity Choice Is Not Permanent. Your Tax Bill Does Not Have to Be Either.

The IRS allows businesses to change their tax election, subject to timing rules and certain restrictions. If you formed an LLC three years ago and have been paying self-employment tax on your full net income, an S-Corp election filed before the deadline could eliminate that tax on a portion of your income.

For a business owner netting $150,000 per year, that is often $10,000 to $20,000 in annual savings, every year, going forward.

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LLC taxed as a disregarded entity pays self-employment tax on 100% of net income

S-Corp election allows owners to pay a reasonable salary and take remaining profit as a distribution, which is not subject to self-employment tax

C-Corp is rarely the right choice for small business owners due to double taxation, but it is right in specific growth and exit scenarios

The wrong entity type for your income level costs real money every year

Elections have strict deadlines, late elections require IRS approval and are not guaranteed

What You Get

How We Help

Full Entity Analysis

We review your current structure, your income, your expenses, and your long-term goals before recommending any change.

Self-Employment Tax Reduction

For many LLCs and sole proprietors, an S-Corp election is the single highest-ROI tax move available. We calculate exactly what you would save.

S-Corp Compliance After Election

An S-Corp election comes with payroll, reasonable compensation requirements, and annual filings. We help you stay compliant so the election holds.

Multi-Entity Strategy

Business owners with multiple LLCs or a mix of real estate and operating businesses often benefit from a coordinated entity structure that reduces taxes across all entities.

C-Corp Planning for Growth Companies

When retained earnings, investment, or a planned sale make a C-Corp advantageous, we structure the election and help you plan the exit.

Flat Fee Review

Entity selection analysis is priced as a flat fee. You know the cost before we start, and the savings almost always exceed the fee in the first year.

Natalia Ouellette-Grice, Tax Planning Attorney

Why LCO Law

We Run the Numbers Before We Make a Recommendation

Entity selection is not one-size-fits-all. The right answer depends on your income, your goals, your other entities, and your plan for the business. We do the full analysis before recommending any change.

We do not recommend entity changes without running the full tax projection first
We file the election correctly and on time, late elections are not guaranteed by the IRS
We coordinate with your payroll provider after an S-Corp election to set up the required salary
We explain each option in plain language before you decide anything
LLM in Taxation gives us the depth to handle complex multi-entity structures

Common Questions

Entity Tax Selection FAQ

Can I change my LLC's tax election without dissolving and reforming?

In most cases, yes. An LLC can elect S-Corp or C-Corp taxation without dissolving. The LLC remains in place as the legal structure while the tax classification changes.

When is the deadline to file an S-Corp election?

To be effective for a given tax year, the S-Corp election must generally be filed by March 15 of that year for existing entities, or within 75 days of formation for new entities. Late relief is available in limited circumstances.

What is reasonable compensation for an S-Corp owner?

The IRS requires that S-Corp owner-employees receive a salary that is reasonable for the services they perform. There is no fixed number, but it must be defensible based on industry standards, the owner's role, and the business's revenue.

My CPA already advises me on my entity. Why do I need a separate review?

Many CPAs focus on compliance, filing accurate returns for the structure that exists. Tax planning means evaluating whether that structure is still the right one. These are different services.

Does Florida have a state income tax that affects this decision?

Florida has no personal income tax, which simplifies some planning. However, Florida does impose a corporate income tax on C-Corps and on S-Corps with federal built-in gains, so the state picture still matters.

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Meet with our team to review your current entity structure and find out whether you are paying more tax than you have to. No pressure, no obligation.

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