Audit and Review Readiness
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Entity Structure and Tax Election Readiness
Assess whether your current legal entity and tax election still fit ownership, liability, payroll, and growth plans, and what to gather before a structuring conversation.
5 guided steps
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Official guidance links
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Your free guided checker
Answer a few quick questions below. It is private - nothing is submitted or stored - and takes about a minute.
Informational business diagnostic only; not accounting, audit, tax, legal, investment, lending, or valuation advice.
The questions this tool walks you through
Here is what the checker asks and why each step matters. Prefer to talk it through? Contact us and we will help directly.
Are you actively planning to raise outside equity, bring in institutional investors, or grant equity to employees in the next few years?
Priced venture rounds, convertible instruments, and standard option plans are built around C-corporation stock, not LLC units or S-corporation shares.
Model a C-corporation reorganization with counsel before you open a funding round.
Official guidance: IRS business structures
Does the business hold or plan to hold valuable assets - real estate, equipment, intellectual property, or a second operating line - that you want insulated from the risks of the main operating business?
A holding company or separate operating entity can wall off appreciating or high-value assets from the liabilities of day-to-day operations.
Design a holding or multi-entity structure to separate assets from operating risk.
Official guidance: IRS business structures
Is the business currently an LLC or sole proprietorship taxed as a pass-through - rather than already an S-corporation or C-corporation?
An S-corporation election is only worth modeling if you are not already taxed as one; it layers onto an existing LLC or corporation.
Keep the current structure and revisit only when ownership or goals change.
Official guidance: IRS business structures
After paying each active owner a reasonable salary for the work they do, does the business still throw off net profit above roughly $50,000 a year per active owner?
Commonly cited around this range: above it, taking the residual as distributions rather than wages can save self-employment tax by more than the added payroll and compliance cost - confirm your own numbers.
Keep the current pass-through structure until profit clears the S-election break-even.
Official guidance: IRS business structures
Are all owners eligible U.S.-person shareholders - no partnerships, corporations, or nonresident aliens on the ownership ledger - with a single class of economic interest?
An S-corporation is restricted to 100 or fewer eligible U.S. shareholders and one class of stock; a disqualifying owner or special allocation blocks the election.
Have a CPA model an S-corporation election on the existing entity. Keep the current structure; S-corporation eligibility is not met as owned today.
Official guidance: IRS business structures
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