Welcome to Part 3 of our compliance series.
Let’s break down what you need to do to keep your business out of trouble! 🚀
You chose an S-Corp to save on taxes—smart move. But with great tax perks come great compliance responsibilities (and more deadlines to remember).
Miss a filing? Forget a form? The IRS can revoke your S-Corp status, leaving you stuck with C-Corp tax rates—which is basically the business equivalent of stepping on a rake. 😬
What’s on Your Compliance Calendar?
✅ File Your Annual Report & Pay State Fees – Your state wants its cut, and skipping this can get your business suspended. Check deadlines with your Secretary of State.
✅ Maintain Corporate Bylaws & Meeting Minutes – Unlike an LLC, an S-Corp must follow corporate formalities to keep its status. Yes, that means holding shareholder and board meetings and documenting them.
✅ Federal & State Tax Filings – You’re taxed as a pass-through entity, which means you file Form 1120-S for federal taxes and send Schedule K-1 to shareholders. Also, don’t forget state tax obligations—not all states follow the IRS’s pass-through taxation rules.
✅ Reasonable Salary Rule – If you’re an owner-employee, you must pay yourself a "reasonable salary" before taking distributions, or the IRS might hit you with back taxes and penalties.
✅ Payroll Tax Compliance – Since S-Corp owners take salaries, you need to withhold and pay payroll taxes (Social Security, Medicare, unemployment). Messing this up = IRS headaches.
✅ Beneficial Ownership Report (New for 2024!) – Just like LLCs and C-Corps, S-Corps must file this with FinCEN. Skip it, and you could face fines.
✅ Business Licenses & Permits – Expired licenses = possible fines or shutdowns. Keep them up to date at the local, state, and industry level.
What Happens If You Ignore This?
🚨 Lose S-Corp status and get taxed as a C-Corp (hello, higher taxes).
🚨 IRS penalties for payroll tax mistakes (they do not play around).
🚨 State fines and possible business suspension if you skip reports or fees.
🚨 Personal liability risks if you fail to follow corporate formalities.
The Fix? Stay on Top of It.
Set reminders, use compliance software, or get an accountant who actually enjoys this stuff.
S-Corp perks only work if you follow the rules—so don’t drop the ball. 🚀
Disclaimer: We’re not lawyers or accountants—just people who’ve done the research. This guide is for informational purposes only and not legal or financial advice. Always consult a licensed professional to ensure you’re making the right decisions for your business.
Comments