Quick Take: Why This Choice Matters

Picking between an LLC and an S-Corp in Wisconsin changes how you pay taxes, run payroll, and take home money as the owner. The right setup can lower self-employment taxes, shape your paycheck, and make bookkeeping either simpler or more complex. In this owner’s playbook from Curler Accounting, you will see how each choice works in Wisconsin, how payroll fits in, and what your take-home pay might look like at different profit levels. You will also learn how Curler Accounting & Tax Services, LLC can help you choose, file, and run the option that fits your goals.

LLC vs. S-Corp in Wisconsin: The Basics

What an LLC is

A limited liability company protects your personal assets and is flexible for taxes. By default, a single-member LLC is taxed like a sole proprietorship. A multi-member LLC is taxed like a partnership. In both cases, business profit usually passes through to your personal tax return. You pay income tax and self-employment tax on that profit, subject to limits and special rules.

What an S-Corp is

An S-Corp is not a separate type of company under Wisconsin law. It is a federal tax election for eligible corporations and LLCs. If your LLC elects S-Corp status, you must pay yourself a reasonable W-2 salary. Profit left after salary can be distributed to you and is usually not subject to self-employment tax. That is the key difference that often drives tax savings.

Wisconsin treatment

Wisconsin generally follows the federal S-Corp election. S-Corporations file a Wisconsin Form 5S informational return. Owners report their share of profit on their Wisconsin personal return. Wisconsin does not usually tax S-Corps at the entity level, though there are special cases and exceptions. Most small owners see pass-through treatment at the personal level.

Taxes You Need To Know

LLC default taxes

Under the default rules, your net profit is subject to federal income tax and self-employment tax. Self-employment tax covers Social Security and Medicare. The combined rate is 15.3 percent on income up to the Social Security wage base, plus Medicare above that. You may also face the additional Medicare tax at higher income levels. Wisconsin income tax applies to the profit as well. Wisconsin has progressive rates that vary by income. You also may qualify for the federal Qualified Business Income deduction. The QBI deduction is often up to 20 percent of eligible business income, subject to limits.

S-Corp taxes

With an S-Corp, your reasonable salary is subject to payroll taxes. This includes employer and employee Social Security and Medicare, plus unemployment taxes. The remaining profits pass through to you as a distribution. Distributions are not subject to self-employment tax. You still pay federal and Wisconsin income tax on both the salary and the pass-through profit. Your QBI deduction is based on pass-through profit and does not include your W-2 wages from the S-Corp. That means a higher salary can reduce the QBI deduction.

Wisconsin payroll and unemployment

If you run an S-Corp and pay yourself a salary, you need payroll. That includes withholding income tax, paying the employer share of FICA, filing payroll returns, and paying state unemployment. Wisconsin unemployment applies up to a state wage base. Rates vary by employer. There is also a small federal unemployment tax. Payroll brings extra forms and due dates. Many owners hire Curler Accounting to run payroll so they can focus on sales, service, and growth.

Reasonable Salary: The S-Corp’s Guardrail

Reasonable salary is the foundation of an S-Corp plan. The IRS requires owners who work in the business to take a wage that matches the market for the tasks they perform, their experience, their time spent, and business profit. Pay yourself too little and you risk penalties. Pay yourself too much and you lose the S-Corp tax advantage because payroll taxes go up and QBI goes down. Curler Accounting helps you document reasonable compensation using role benchmarks, time logs, and profit trends.

Take-Home Pay: Three Simple Examples

Below are ballpark comparisons to show how llc vs s corp wisconsin decisions can change owner take-home pay. These are simplified. They focus on self-employment tax vs payroll tax. Federal and state income tax will still apply in both cases. Actual results vary based on QBI limits, deductions, filing status, credits, and the Social Security wage base in a given year.

Scenario 1: Profit about 60,000

Facts: One owner in Wisconsin. Profit before owner pay is 60,000. The owner works full time in the business.

LLC default tax view: The 60,000 is subject to self-employment tax. The rough SE tax at this level is about 9,000. You also face income tax and may get a QBI deduction.

S-Corp view: Assume a reasonable salary of 40,000. Combined employer and employee FICA on that wage is about 6,120. Add a modest amount for unemployment and payroll filings. Call total payroll taxes around 6,300 to 6,600. That looks like a 2,400 to 2,700 reduction compared to the LLC default. But you must subtract payroll costs and consider a smaller QBI deduction due to wages. After those, the net savings might be small, often under 1,000. For many owners at this level, the extra admin is not worth it yet.

Scenario 2: Profit about 120,000

Facts: One owner. Profit before owner pay is 120,000. The owner works full time in Wisconsin.

LLC default tax view: Self-employment tax is roughly 17,000. Income tax also applies. QBI may reduce taxable income.

S-Corp view: Assume a reasonable salary of 70,000. Combined FICA on that wage runs about 10,700. Add state and federal unemployment and filings, and payroll taxes total around 11,200. Compared to 17,000, that suggests about 5,800 in savings before admin costs and QBI effects. Subtract 1,000 to 1,500 a year for payroll service and software, and the smaller QBI deduction can reduce the savings by another 500 to 2,000. Many owners still net 2,500 to 4,000 in real savings. At this profit level, an S-Corp often starts to pay off.

Scenario 3: Profit about 300,000

Facts: One owner. Profit before owner pay is 300,000. The owner works full time.

LLC default tax view: You pay self-employment tax on profit. Social Security applies up to the annual wage base. Medicare applies to all profit, plus the additional Medicare tax applies over higher thresholds. The total SE tax becomes significant.

S-Corp view: Assume a reasonable salary of 140,000. You pay payroll tax on wages only. Distributions are not subject to self-employment tax. You likely avoid the additional Medicare tax because your wages are under the threshold, though the pass-through profit can still impact your overall tax picture. Even after payroll costs and a lower QBI deduction, the savings can be several thousand to well over ten thousand. At high profit levels, S-Corp treatment can be a strong fit when salary is set correctly and supported by documentation.

When an S-Corp Helps vs. When It Does Not

Good fit signs

• Annual profit is steadily above 100,000.
• You work in the business and can justify a market-based salary.
• You want to reduce self-employment tax on part of the profit.
• You are comfortable running payroll or outsourcing it to Curler Accounting.
• You will keep clean books and meet filing deadlines.

Poor fit signs

• Profit is small or very inconsistent.
• You do not want the extra payroll filings and costs.
• Your work time is minimal, making a reasonable salary unclear.
• You plan to add investors who do not meet S-Corp eligibility rules.

Wisconsin Compliance Checklist

Here is a simple path many Wisconsin owners follow when evaluating llc vs s corp wisconsin choices. Work with a CPA to confirm timing and details for your situation.

1. Form an LLC with the Wisconsin Department of Financial Institutions. File the Articles of Organization. Keep your Operating Agreement and ownership records.
2. Get an EIN from the IRS.
3. Open a business bank account and keep finances separate.
4. Elect S-Corp status with IRS Form 2553 if you choose that route. There are deadlines, but late relief can be available.
5. Register for Wisconsin withholding and unemployment if you will run payroll.
6. Set up payroll and choose a reasonable salary. Document the basis for your wage.
7. File federal and Wisconsin payroll returns on schedule. Issue W-2s and file year-end forms.
8. File the S-Corp return and your Wisconsin Form 5S if you elected S-Corp status. Owners report pass-through income on their personal returns.
9. File annual reports with Wisconsin. Keep corporate records and minutes up to date.

Costs You Should Expect

An LLC without S-Corp status often has lower ongoing costs. An S-Corp usually has extra items.

• Payroll setup and monthly processing.
• Quarterly and annual payroll filings.
• Unemployment contributions at state and federal levels.
• An S-Corp tax return in addition to your personal return.
• Reasonable compensation analysis and documentation.

Curler Accounting offers bundled accounting and payroll solutions for S-Corp owners so you can get the tax benefits without the administrative headache.

QBI and Other Planning Tips

The QBI deduction can reduce your taxable income. For S-Corp owners, only pass-through profit counts. W-2 wages you pay yourself do not count as QBI. If you set your salary too high, your pass-through profit goes down and your QBI deduction shrinks. If you set salary too low, you risk penalties. The sweet spot depends on your role, industry, and profit. Curler Accounting models several salary options to find a balanced result.

Do not forget retirement plans. A Solo 401(k) or SEP IRA can add large deductions. Health insurance for owners has special handling in an S-Corp. These choices change take-home pay in big ways. A coordinated plan often beats a single-issue focus on entity type.

Common Mistakes to Avoid

• Skipping reasonable compensation and taking only distributions.
• Electing S-Corp too early when profit is not stable.
• Not running payroll on time or missing unemployment filings.
• Mixing business and personal funds.
• Ignoring Wisconsin filing requirements or annual reports.
• Setting salary without documenting how you reached the number.

How Curler Accounting Helps Wisconsin Owners

Curler Accounting & Tax Services, LLC is led by Matt Curler, CPA. Matt has more than 20 years in tax, finance, and treasury management with experience at KPMG and Harley-Davidson. He serves individuals and small businesses across Washington County, Mequon, and north of Milwaukee. A veteran of the Wisconsin Army National Guard and former Milwaukee Police Officer, Matt brings discipline, integrity, and attention to detail to every client relationship.

Services that support your llc vs s corp wisconsin decision include tax preparation and planning, bookkeeping, payroll solutions, cash flow optimization, business tax and compliance, IRS representation, and entity formation. Whether you need help choosing between an LLC and an S-Corp, want ongoing payroll management, or need a tax plan for growth, Curler Accounting delivers hands-on, practical guidance.

Why clients choose Curler Accounting is simple. You get personalized service, military precision with ethical standards, a small business focus, and community commitment through local volunteer work with Rotary Club and the VA Hospital. Matt’s client-first approach makes financial management simple and stress-free. Services are available locally in Mequon and statewide online for your convenience.

LLC vs S-Corp Wisconsin: Quick FAQs

Do I need a separate Wisconsin S-Corp election?

Wisconsin generally follows the federal S-Corp election. If the IRS accepts your Form 2553, you will file a Wisconsin Form 5S. Always confirm special cases with your CPA.

Can my LLC elect S-Corp status later?

Yes. Many owners start as an LLC with default taxation and elect S-Corp status when profit grows. Timing is important. Filing deadlines apply, and late relief may be available.

How do I know my salary is reasonable?

Use market data for your role, account for your duties, your experience, time in the business, and profit levels. Curler Accounting prepares a written reasonable compensation analysis to support your position.

Will S-Corp status save me money every year?

Not always. Savings depend on profit, salary, payroll costs, unemployment rates, and the QBI deduction. At higher profits, savings are more likely. At lower profits, the extra admin can erase the benefit.

Does Wisconsin have an entity-level S-Corp tax?

In most cases, no. Wisconsin S-Corps file an informational return. Profit passes through to owners. There are special rules for certain income types and situations. Get advice for your case.

Your Next Step: A Clear Plan For Your Business

Choosing between an LLC and an S-Corp in Wisconsin is more than checking a box. It is about matching profit, payroll, tax rules, and your long-term goals. If you want a calm, clear, and practical path, Curler Accounting is ready to help. We will review your numbers, build a salary plan, estimate tax savings, and handle the filings so you can focus on customers and growth.

Talk with Curler Accounting & Tax Services, LLC about your llc vs s corp wisconsin decision. Get a straight answer, a realistic savings estimate, and a simple process that fits your business. Local meetings in Mequon or virtual service statewide are available. Let us make your take-home pay, payroll, and compliance work together, not against each other.

This playbook is general guidance. Tax rules change and your situation is unique. Always get personalized advice before you act.