Why Your S-Corp Might Be Costing You Thousands
"Mareaka, everyone is talking about turning their business into an S Corporation to save on taxes- should I do that too?"
For many roofing and HVAC owners, forming an S-Corp sounds like a no-brainer tax move.
You’ve probably heard someone say, “You’ll save thousands in taxes.”
But here’s the truth: electing S-Corp too early can actually cost you money — in payroll expenses, admin headaches, and unnecessary compliance work.
This week’s all about a move I see way too many contractors make too early — and it ends up costing them more than it saves.
What We're Talking About
Why switching to an S-Corp too early can actually cost you more.
How to balance salary and distributions without triggering IRS attention.
The profit range where the S-Corp finally starts paying off.
Before we dive into it, let me introduce myself if we haven’t met yet.
I’m Mareaka from Bunch Accounting, and I specialize in helping roofing and HVAC business owners like you make confident, profitable decisions.
The S-Corp election can be one of the smartest tax strategies a contractor uses — when the timing is right.
The problem?
Most owners jump in too early because they heard it’s what “real businesses” do.
The result: more work, higher costs, and little to no savings.
Let’s clear up when an S-Corp actually helps — and when it hurts.
Reality Check
When you become an S-Corp, the IRS requires you to pay yourself a reasonable salary through payroll. That means:
You’re now on payroll like an employee.
You’ll need payroll software or a provider.
You’ll owe payroll taxes (Social Security, Medicare, unemployment) every pay period.
If your business isn’t consistently earning around $60K–$80K in net profit, those payroll costs can wipe out most — if not all — of the tax savings you expected.
So what to do?
Here’s how to think about it:
Under $60K profit: Stay LLC — keep it simple and flexible.
$60K–$80K profit range: Time to evaluate — might make sense depending on your goals.
$80K+ profit: S-Corp becomes a clear win, saving thousands in self-employment tax.
The magic of the S-Corp isn’t in the title — it’s in the timing.
Making the switch too soon is like installing a new roof before you’ve finished framing the house.
One HVAC owner I worked with elected S-Corp at $40K profit.
He thought he’d save $6K in taxes.
Instead, his payroll costs and compliance fees added up to nearly $5K — leaving him with barely any savings and a lot more stress.
When he grew past $100K profit the following year, then the S-Corp finally made sense, and we locked in real savings the right way.
If you’re not sure whether it’s time to elect S-Corp, don’t guess.
The right setup depends on your profit level, goals, and how much you pay yourself.
It’s not about doing what everyone else does — it’s about doing what fits your numbers.
Get Your Free Guide
So what's your next steps?
If you’re a roofing or HVAC business owner thinking about S-Corp status — or already have one and aren’t sure if it’s paying off — book a 30-minute call.
I’ll walk you through when the timing makes sense and how to avoid paying extra just to “look official.”
Book a Profit and Tax Analysis and we’ll break down the data behind your numbers.
Let us know what you think in the comments!
