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IRS & Financial ConsultingSanta Monica, CA· Solo marketing consultant
S-Corp Election Saved $18,400 in Self-Employment Tax
$18,400
Year-1 SE tax savings
$72,000
Reasonable salary set
$76,000
Net distributions
The challenge
A solo marketing consultant netting $148K was paying $20K+/year in self-employment tax. She'd been told an S-corp election would help but didn't know what 'reasonable salary' looked like.
Our approach
- Filed Form 2553 with late-election relief under Rev. Proc. 2013-30.
- Set a reasonable salary of $72K based on BLS marketing-consultant median.
- Set up payroll with Gust, including federal and CA quarterly deposits.
- Structured remaining $76K as quarterly distributions.
- Coordinated with CA Franchise Tax Board for $800 minimum franchise fee.
The outcome
Year-one savings: $18,400 net of new payroll costs and the $800 CA franchise fee. Annual administrative overhead under $1,800.
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