What is a virtual CPA?

A virtual CPA provides the same services as a traditional CPA firm — tax preparation, bookkeeping, audits, financial planning — but delivers them remotely using secure cloud technology. You get expert-level service without visiting a physical office.

How much do virtual CPA services cost?

Pricing depends on the complexity of your financial situation and the services you need. We provide transparent fee estimates during your initial consultation. Virtual CPA firms typically have lower overhead than traditional firms, which translates to more competitive rates.

Do I need an audit for my nonprofit?

Many states require nonprofits to have an independent audit once they exceed certain revenue thresholds, often $500,000-$750,000. Grant-making organizations and government agencies frequently require audited financial statements. We can help determine your specific audit requirements.

What is the difference between an S-Corp and an LLC for tax purposes?

An LLC provides liability protection and pass-through taxation by default. An S-Corp election can provide additional tax savings by allowing owners to split income between salary (subject to payroll taxes) and distributions (not subject to payroll taxes). The right choice depends on your income level, business structure, and state tax laws.

What does a virtual CFO do?

A virtual CFO (fractional CFO) provides high-level financial strategy and oversight on a part-time basis — budgeting, forecasting, cash flow management, financial analysis, KPI reporting, and strategic financial planning. You get C-suite financial leadership without the full-time cost.

Can you help if I'm behind on bookkeeping or taxes?

Yes. We offer catch-up bookkeeping services to bring your books current and can help resolve back tax issues including IRS notices, unfiled returns, and payment plans.

What accounting software do you work with?

We work with QuickBooks Online, Xero, FreshBooks, Wave, and other major cloud accounting platforms. We can also help you select and set up the best software for your business.

How do I prepare for tax season?

Organize financial records throughout the year, keep receipts for business expenses, track mileage and home office usage, make quarterly estimated tax payments, and schedule a year-end tax planning session before December 31.

What is DCAA compliant accounting?

DCAA (Defense Contract Audit Agency) compliant accounting is a system that meets federal government requirements for contractors. It includes proper timekeeping, job cost accounting, indirect cost allocation, and specific internal controls required for government contract work.

Do I need a CPA or a bookkeeper?

Bookkeepers handle day-to-day recording of financial transactions. CPAs handle higher-level work — tax planning and preparation, audits, financial analysis, and strategic advice. Many businesses need both. Our firm provides both services so you have one team managing everything.

What's the difference between an audit, review, and compilation?

An audit provides the highest level of assurance through independent verification of financial statements. A review provides limited assurance through analytical procedures and inquiries. A compilation presents financial information in statement format without assurance. The right choice depends on your stakeholders' requirements.

Do you serve businesses outside the DMV area?

Yes. While our primary service area is Washington DC, Maryland, and Virginia, we serve clients nationwide through our 100% virtual model. Our cloud-based systems allow us to work with businesses anywhere in the United States.

How do I elect S-corp status in Virginia, Maryland, or DC?

File IRS Form 2553 within 75 days of the beginning of the tax year you want S-corp status to apply, or by March 15 for the current year. There's also a late election procedure. Once federal approval is confirmed, check state requirements: Virginia and Maryland require separate S-corp election acknowledgment with their respective revenue departments. DC automatically follows the federal S-corp election.

What is a 'reasonable salary' for S-corp purposes?

The IRS requires S-corp owner-employees to receive a reasonable salary — roughly what you'd pay someone else to do your job. The IRS scrutinizes salaries that are too low relative to distributions. Common benchmarks: 40–60% of net profit, or market-rate salary for your industry and role. Salary too low is a red flag; our CPAs help you determine the defensible amount.

Are there any downsides to S-corp election?

Yes. S-corps require running formal payroll (W-2 salary, quarterly 941 deposits, year-end W-2), filing a separate business tax return (Form 1120-S), and potentially paying state franchise taxes. In Virginia, there's no S-corp franchise tax. Maryland has an 8% pass-through entity tax (with credit). These administrative costs ($1,500–$3,000/year in CPA fees) must be weighed against the SE tax savings.

At what profit level does S-corp make sense?

Generally at $40,000–$50,000 in net profit per year, the SE tax savings begin to meaningfully exceed the additional compliance costs. For most business owners in DC, Virginia, and Maryland, S-corp election becomes clearly advantageous around $60,000–$75,000 in annual net profit.

Can my LLC elect S-corp status?

Yes. A single-member or multi-member LLC can elect to be treated as an S-corporation for federal tax purposes by filing Form 2553. The LLC remains an LLC for state law purposes (same operating agreement, same liability protection) but is taxed as an S-corp for federal income tax. This is the most common structure for established small businesses.

What is the Maryland pass-through entity tax (PTET)?

Maryland enacted a pass-through entity tax (PTET) election that allows S-corps and partnerships to pay state income tax at the entity level. This can be advantageous because the entity-level payment is fully deductible as a business expense, effectively working around the $10,000 SALT deduction cap. Our CPAs analyze whether the Maryland PTET election benefits your specific situation.

Last Updated: May 2026

LLC vs. S-Corp: Which Saves More Tax?

For DC, Maryland, and Virginia business owners earning over $40,000 in net profit, S-corp election can save $3,000–$15,000 per year in self-employment tax. Here's how to know if it's right for you.

Should my DC, Maryland, or Virginia business elect S-corp status?

S-corp election makes financial sense when your business profits exceed approximately $40,000–$50,000 per year. At that level, the self-employment tax savings ($3,000–$15,000+ annually) typically outweigh the additional administrative costs of running payroll and filing Form 1120-S. Below that threshold, a simple LLC is usually more cost-effective.

Key Definitions

S-Corp Election: An S-corp (S corporation) is not a separate entity type — it's a tax election filed with the IRS using Form 2553 that allows an LLC or corporation to be taxed as a pass-through entity with the ability to split income between a W-2 salary and distributions, reducing self-employment tax.

Self-Employment Tax: Self-employment tax is the 15.3% tax (12.4% Social Security + 2.9% Medicare) paid by self-employed individuals on net business income. Unlike employees who split this tax with their employer, sole proprietors and LLC members pay the full amount.

LLC vs. S-Corp: Key Differences

Feature	Single-Member LLC	S-Corp Election
Self-employment tax on profits	15.3% on all net profit	Only on reasonable salary
Payroll requirements	None	Owner must take W-2 salary
Tax filing	Schedule C (personal return)	Form 1120-S + K-1
State filing requirements (VA/MD/DC)	Simpler	Additional annual reports
Administrative complexity	Low	Moderate
Best for annual profit	Under $40,000	Over $40,000–$50,000
Potential annual tax savings	—	$3,000–$15,000+

How S-Corp Election Works

When you elect S-corp status, you split your business income into two buckets: a W-2 salary (subject to full 15.3% payroll/SE tax) and distributions (not subject to SE tax). The IRS requires the salary to be "reasonable" — but anything above that flows out as a distribution, taxed only at ordinary income rates.

Example: $100,000 in Net Profit

As LLC (Schedule C):

SE tax on $100,000 × 0.9235 × 15.3% = $14,130

As S-Corp ($40K salary, $60K distribution):

Payroll tax on $40,000 × 15.3% = $6,120

Annual savings: ~$8,010

Estimated S-Corp Tax Savings by Profit Level

Feature	Annual Profit	SE Tax as LLC	S-Corp SE Tax
$75,000	$10,597	$4,590 (on $30K salary)	~$6,007
$100,000	$14,130	$6,120 (on $40K salary)	~$8,010
$150,000	$21,195	$9,180 (on $60K salary)	~$12,015
$250,000	$22,688 (wage base cap)	$12,240 (on $80K salary)	~$10,448

Note: SE tax = profit × 0.9235 × 0.153 (up to SS wage base $168,600 in 2024). S-corp SE tax = reasonable salary × 0.153. Reasonable salary shown as approximately 40% of profit. Figures are estimates — consult a CPA for your specific situation.

DC, Maryland, and Virginia Considerations

Washington, DC

DC automatically follows federal S-corp election (no separate state form)
DC Unincorporated Business Tax (UBT) applies to LLCs — S-corp may exempt you
DC Franchise Tax applies to S-corps (8.25% on net income)

Maryland

Maryland requires separate S-corp election acknowledgment
Maryland PTET election available — may offset SALT cap impact
8% pass-through entity tax with offsetting credit for members

Virginia

Virginia automatically accepts federal S-corp status
No Virginia S-corp franchise tax (LLC/S-corp parity)
Virginia PTET election available for pass-through entities

When NOT to Elect S-Corp

Profit under $40,000: The administrative costs exceed the SE tax savings
Planning to sell the business soon: S-corps have structural limitations that can complicate asset sales
More than 100 shareholders planned: S-corps have a 100-shareholder limit and restrictions on ownership types
Wanting to add foreign investors: S-corps cannot have non-U.S. shareholders
Complexity not worth it: If you hate paperwork and payroll, the discipline required may not be a fit

Frequently Asked Questions

Related Services & Guides

How to Elect S-Corp|Tax Preparation|LLC vs. S-Corp Calculator|Bookkeeping Services

Find Out If S-Corp Election Saves You Money

Our CPAs will run the numbers on your specific profit level, salary expectations, and state requirements to tell you exactly how much an S-corp election would save you — and whether it's worth the additional complexity.