It won't necessarily increase any deductions or save you taxes. You get to write-off all of your business expenses, whether you are a LLC or a S-corp.
The S-corp can increase your costs substantially. If you are a partnership (multi-member LLC), it increases your requirements somewhat, but if you are a single-member LLC it increases your administrative burden drastically. It also creates a far more complicated tax situation because:
- You must pay yourself as an employee (with a W-2 and file payroll filings each quarter), and
- File the business form 1120-S and provide yourself with a schedule K-1 for your personal taxes, too
- Additional costs to form correctly and maintain a s-corp.
Once you are earning more income than you would be paid at a similar company, in your industry, for a leadership position, then it can be worth filing as a S-corporation. That this should be documented by an 3rd party research company.
If your income is high enough, then the S-corp saves you taxes by allowing you to pay yourself a salary, plus earning in excess, in the form of dividends.
Unfortunately, unprofessional tax pros were setting people up with 'fraudulent' type returns to save taxes. For example reporting $20k in salary and $20k in dividends (even $40k in salary and 40k in dividends). As a leader in a business, your salary should truly represent that level. That doesn't fly with the IRS and you shouldn't follow anyone's guidance to try to save taxes this way. There are big fines and penalties.
Complete IRS form 2553 to be taxed as a S-corp. Learn more and find the form at the IRS here: https://www.irs.gov/forms-pubs/form-2553-election-by-a-small-business-corporation
This is not income tax related and not handled in TurboTax. Read more about this on the blog post here: https://turbotax.intuit.com/tax-tips/small-business-taxes/can-i-convert-my-llc-to-an-s-corp-when-fil...
