S-Corp vs. LLC · Construction Tax Structure · Self-Employment Tax · Payroll Tax Savings
S-Corp vs. LLC · Payroll Tax · Self-Employment Tax · Construction Tax Planning · Entity Structure
S-Corp vs.
LLC.
The S-Corp vs. LLC question is the most common entity structure question SPM gets from growing subcontractors. The answer isn't the same for everyone — but for most subcontractors over $150K–$200K in net income, the S-Corp election saves meaningful money in payroll taxes. Here's the financial math and what to discuss with your CPA.
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SPM vs. Other CFO Firms
Most CFO Firms Serving This Trade
- High revenue minimums — most won't serve under $5M
- Advisory only — no bookkeeping, no implementation
- No job costing setup or ControlQore management
- No monthly WIP as standard deliverable
- No pricing published — discovery call required
- No vetted partner network for bonding, lending, or liens
- No prevailing wage specialty
The Construction CFO — SPM
- Serves $1M–$12M — starts at $1,900/month
- Full implementation — bookkeeping, job costing, CFO advisory
- ControlQore setup and managed for you every month
- Monthly WIP standard in Executive tier
- Full pricing published — no discovery call to find out costs
- Vetted partners for bonding, lending, lien services, payroll
- Prevailing wage and Davis-Bacon specialty
What We See in This Business
01
You're Paying Self-Employment Tax on All Your Net Income
An LLC taxed as a sole proprietorship or partnership pays self-employment tax — currently 15.3% — on all net income up to the Social Security wage base ($168,600 for 2024) and 2.9% on everything above. On $300K of net income, that's roughly $30,000–$35,000 in self-employment taxes. An S-Corp structure can legally reduce this exposure.
02
You're Not Sure If the S-Corp Election Actually Saves You Money
The S-Corp election requires running actual payroll for a 'reasonable salary' — which has administrative cost. Payroll processing, additional tax filings, and potentially higher accounting fees. Whether the tax savings exceed the administrative cost depends on your net income level. Most CPAs put the breakeven at $60K–$80K in net income — below that, the administrative cost may exceed the savings.
03
You Made the S-Corp Election Without a Strategy
Some contractors elect S-Corp status without a clear salary vs. distribution strategy. If your salary is set too low, the IRS may reclassify distributions as wages — triggering back payroll taxes, penalties, and interest. The S-Corp election requires intentional planning, not just checking the box.
How SPM Fixes It
How the S-Corp Payroll Tax Savings Work
An S-Corp allows you to split your compensation between W-2 salary (subject to payroll taxes) and S-Corp distributions (not subject to payroll taxes). If your business generates $300K in net income and you pay yourself a reasonable salary of $120K, you pay payroll taxes on $120K — not $300K. The $180K in distributions avoids the 15.3% self-employment tax rate. On $180K, that's approximately $27K in payroll tax savings — minus the administrative cost of running payroll and S-Corp compliance.
What Is a 'Reasonable Salary'
The IRS requires S-Corp owner-employees to pay themselves a reasonable salary for their services — what you'd have to pay someone else to do your job. For a construction business owner actively working in the business, reasonable salary is typically $80K–$150K depending on the nature of the work, the market rate for similar positions, and the revenue of the business. Salary set too low is an audit trigger. Your CPA should determine the right number — not SPM.
SPM Coordinates the Financial Side of the Election
The S-Corp election decision belongs with your CPA and attorney. SPM ensures the financial management systems work correctly once the election is made — payroll coded correctly to jobs and overhead, distributions tracked properly on the balance sheet, and the financial statements accurately reflecting the new structure. The interplay between S-Corp salary and construction job costing requires intentional setup in ControlQore to avoid miscoding owner compensation.
Service Tiers
Tier 01
Core Financial
Starts at $1,900 / month
- ControlQore setup and management
- Job costing aligned to your estimate structure
- Cost-to-complete tracking — updated monthly
- Full-service bookkeeping — minimum 30 min/week
- Vendor payments via ACH (you approve, we initiate)
- Accounts receivable management
- Bank reconciliations and transaction matching
- Controllership
- 1 monthly CFO meeting
- 60-day onboarding — books migrated to last taxable year
Most Popular
Tier 02
Executive Financial
Starts at $2,900 / month
- Everything in Core Financial
- Monthly WIP schedule — delivered every month, standard
- 13-week cash flow forecasting
- CEO Report — monthly financial dashboard
- 3 CFO advisory meetings per month
- Strategic accountability and actionable to-dos
- Direct access to Josh Luebker
Pricing by Revenue
Revenue Range
(Last 12 Months) |
Core Financial
Monthly |
Executive Financial
Monthly |
| Under $1M | $1,900 | $2,900 |
| $1M – $3M | $2,600 | $3,600 |
| $4M – $6M | $3,800 | $5,500 |
| $7M – $9M | $5,100 | $6,900 |
| $10M – $12M | $6,100 | $8,500 |
| $13M+ | Quoted | Quoted |
Vetted Partner Network
National Lien Services
When AR gets too long, we connect you directly to our lien services partner to protect what you've earned.
Additional cost — not included in monthly fee
Payroll Integration Partners
Prevailing wage and regular payroll software partners integrated directly with ControlQore job costing.
Additional cost — not included in monthly fee
Bonding Partners
Surety relationships and bonding capacity support. We prepare the financials — our partners get you bonded.
Additional cost — not included in monthly fee
Lending Partners
Working capital lines and equipment financing through vetted lenders who understand construction.
Additional cost — not included in monthly fee
Reviewed Financials
CPA-level financial statement reviews for banking, bonding, and large contract requirements.
Additional cost — not included in monthly fee
CPA Coordination
We work alongside your existing CPA — not replacing them. Clean books and job costing make tax time easier.
Included — no extra cost
Common Questions
Straight answers.
At what revenue level does the S-Corp election typically make financial sense?
Most CPAs place the breakeven at $60K–$80K in business net income — where payroll tax savings start to meaningfully exceed administrative cost. At $150K+ in net income, the savings are typically significant enough that most construction business owners benefit from the S-Corp election. Above $200K in net income, the decision is usually clear. The exact number depends on your state, your CPA's fees, and your payroll processing costs.
Can I make the S-Corp election mid-year?
The S-Corp election (IRS Form 2553) must generally be filed within 75 days of the beginning of the tax year for which it is to take effect. Late elections may be accepted with reasonable cause. Most CPAs recommend making the election effective January 1 for a clean tax year start. If you're considering the election, discuss timing with your CPA now rather than waiting until year end.
What's included in Core Financial?
ControlQore setup, job costing aligned to your estimates, cost-to-complete tracking, full bookkeeping (minimum 30 min/week), ACH vendor payments (you approve, we initiate), AR management, bank reconciliations, transaction matching, controllership, and 1 monthly CFO meeting. Starts at $1,900/month.
What does Executive Financial add?
Everything in Core plus monthly WIP schedule, 13-week cash flow forecasting, CEO Report, and 3 CFO advisory meetings per month. Starts at $2,900/month. WIP, cash flow forecasting, and the CEO Report are Executive tier only.
Do you handle payroll?
No. We have vetted payroll software partners — including prevailing wage integrations — that connect directly with ControlQore. Those are separate engagements at additional cost.
How long does onboarding take?
60 days. We migrate your books to the start of your last taxable year, set up ControlQore, and build your job costing structure. Fully operational in two months.
What software do clients use?
ControlQore. All SPM clients run on ControlQore for job costing and WIP. We set it up and manage it — you don't have to learn it. Clients switching from QuickBooks, Sage, or other platforms migrate during onboarding.
Do you work alongside our CPA?
Yes. We work alongside your existing CPA — not replacing them. Clean books and accurate job costing make their job easier at tax time.
What happens when we grow past $12M?
We have a clear graduation path. We prepare your financials, systems, and team for the transition and connect you with the right firm for your next stage of growth.