ENTITY ELECTION FOR 1099 PROFESSIONALS
Entity Optimization for Realtors and 1099 Professonals
Your entity election is the highest-ROI financial move available to a 1099 professional netting $80,000 or more. Atlas handles the entire process, from helping decide which entity election is most beneficial for your specific situation, filing the entity election, to ongoing payroll compliance.
Most 1099 professionals filing as sole proprietors pay self-employment tax on 100% of their net profit. Proper entity election changes that structure permanently.
$8-12k
Avg Self Employment Savings At 200K Net
Form 2553
Atlas Files On Your Behalf
Year 1
Savings Begin Immediately
How the Entity Election Works
When you operate as a sole proprietor or single-member LLC, the IRS taxes 100% of your net self-employment income at the 15.3% SE tax rate (covering Social Security and Medicare). On $200,000 net income, that's $30,600 in SE taxes before you pay a dollar of income tax.
An S-Corp entity splits your income into two buckets:
- A reasonable salary paid to you as an employee of your own company (subject to payroll taxes)
- A profit distribution paid to you as the shareholder (not subject to SE tax)
On $200k net income with a $75,000 reasonable salary, the S-Corp structure saves approximately $9,500–$11,500 in SE tax annually. This is a permanent, recurring saving.
The Reasonable Salary Requirement
The IRS requires that S-Corp owner-employees pay themselves a "reasonable salary" for the services they perform. This is the most important compliance issue in S-Corp taxation. Setting the salary too low triggers IRS scrutiny. Atlas conducts a formal Reasonable Salary study for every client to establish a defensible, optimized compensation structure.
What Atlas handles in the Entity Setup
Entity election via Form 2553 (or late election relief if applicable)
Reasonable Salary study documentation
Owner Payroll setup and ongoing processing
Quarterly 941 payroll tax filings
Annual W-2 preparation for the owner
Annual entity corporate return preparation
Integration with existing QBO bookkeeping setup
S-Corp vs Sole Proprietor: The Numbers
| Category | Sole Proprietor | S-Corp (Atlas) |
|---|---|---|
| Net Income Subject to SE Tax | 100% ($200k) | Salary Only ($75k) |
| SE Tax Liability | ~$28,000 | ~$10,500 |
| Annual SE Tax Savings | — | ~$17,500 |
| Payroll Compliance | None needed | Managed by Atlas |
| Financial Reports Timeline | Annual (reactive) | Monthly by the 5th |
Find out how much you're leaving on the table.
A 30-minute diagnostic call is all it takes to calculate your entity election savings.
Profit Shield for high-earning 1099 professionals. Proactive tax strategy, automated bookkeeping, and entity optimization.
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