| Option | Typical Cost |
|---|---|
| Simple / straightforward | $400–$500 |
| Standard complexity | $800–$1,300 |
| Complex / contested | $1,200–$1,950 |
| High-stakes litigation | $2,000+ |
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| Expense | Cost |
|---|---|
| LLC formation (prerequisite) | $50–$500 (state filing) |
| S-Corp election (Form 2553) | $0 (free IRS filing) |
| Payroll setup + processing | $50–$200/month |
| Annual tax return (Form 1120-S) | $500–$1,500 |
| Quarterly payroll taxes | 15.3% of salary portion |
S-Corp election saves money when business profit exceeds ~$40,000/year by splitting income into salary (subject to 15.3% self-employment tax) and distributions (not subject to SE tax). On $100,000 profit with a $60,000 reasonable salary, an S-Corp saves approximately $6,000/year in self-employment tax compared to a sole proprietorship. The IRS requires a "reasonable salary" — setting it too low triggers audits. Most CPAs recommend salary at 50–60% of net profit. The S-Corp payroll and tax return complexity ($1,000–$3,000/year in CPA costs) means the tax savings must exceed these costs to be worthwhile.
S Corp costs are driven primarily by complexity and whether the matter is contested. Simple, uncontested matters with clear documentation can often be handled at flat-fee rates. Once disputes arise, costs shift to hourly billing and become much harder to predict.
Geography matters more than most people realize. Attorney rates in New York or San Francisco can be 2–3 times higher than in smaller markets for the same type of work. If your matter does not require a local attorney, hiring outside a major metro can save substantially without sacrificing quality.