On the surface, electing S Corporation status sounds like a no-brainer tax strategy. Save on self-employment tax? Sign me up. But when done without proper planning—or rushed in just before year-end—it can cause more harm than good.

At Polaris Tax & Accounting, we’ve seen the damage firsthand: business owners in Plantation, FL and across the country stuck with unnecessary payroll burdens, IRS scrutiny over compensation, and messy books no one prepared them for.

The S Corp Basics—And Why People Rush

An S Corporation isn’t a type of entity—it’s a tax election that changes how your income is reported and taxed. You pay yourself a reasonable salary via payroll and take the rest as distributions, which aren’t subject to self-employment tax.

But here’s where it goes sideways:

  • No one explained the payroll reporting requirements
  • The owner wasn’t advised on reasonable compensation benchmarks
  • The bookkeeping was never updated to track distributions and basis
  • The S election was made for the wrong entity or too late in the year

Sound familiar? You’re not alone—and you’re not stuck.

Learn more about how we help with Entity Formation and Optimization the right way from day one.

Common Mistakes That Cost Real Money

We’ve reviewed dozens of S Corps that were:

  • Paying too much in payroll taxes because of inflated W-2 wages
  • Drawing distributions without sufficient stock or debt basis, leading to tax surprises
  • Failing to file Form 1120-S properly or timely
  • Missing quarterly estimated payments because no projections were done

If your accountant only shows up in March to “run payroll real quick” before filing, you may be getting bad advice—or no real advice at all.

Get a deeper understanding of how this ties into planning in our post:
Tax Projections vs. Tax Prep – What’s the Difference?

The Polaris Difference—Built for Businesses in Plantation, FL

We work with:

  • Local LLCs and small business owners looking to elect S Corp status strategically
  • Clients already set up as S Corps who want smarter compensation and projection support
  • Out-of-state firms with Florida operations needing compliance cleanup

We don’t do one-size-fits-all planning. We run detailed tax projections, evaluate reasonable compensation, and file the proper elections only when it makes sense. No panic moves. No patchwork advice.

Explore our year-round support on our Tax Planning page.

Based in Plantation, FL—Serving Smart Business Owners Everywhere

We help clients across Florida and beyond implement entity strategies the right way—without rushing, guessing, or flying blind.

📞 Call us at 954-423-3577
🌐 https://polaristaxandaccounting.com