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.

What is the deadline to elect S-corp status?

For new entities: within 75 days of formation for the election to apply to the current tax year. For an existing entity electing for the upcoming year: by December 31 of the prior year. To apply to the current calendar year for an existing entity: by March 15 of that year. Late elections are also possible with IRS relief provisions.

Can an LLC elect S-corp status?

Yes. LLCs can elect to be treated as S-corporations for federal tax purposes by filing Form 2553. The LLC remains an LLC under state law — same operating agreement, same liability protection — but is taxed as an S-corp for federal income tax purposes. This is the most common structure for established small businesses in DC, Virginia, and Maryland.

What happens if I miss the S-corp election deadline?

File Form 2553 with a reasonable cause explanation. The IRS has a simplified late election procedure under Revenue Procedure 2013-30: if you acted consistently as an S-corp (ran payroll, filed your personal return correctly), the IRS typically grants relief and backdates the election to the intended start date.

Do all shareholders need to sign Form 2553?

Yes. Every shareholder who held stock at any point during the tax year(s) for which the election applies must sign the consent section of Form 2553. For a single-member LLC or one-person S-corp, this is just you. For multi-owner entities, all owners must sign before filing.

How long does S-corp election approval take?

The IRS typically processes Form 2553 within 60–90 days and mails a CP261 acceptance letter to the address on file. Keep this letter permanently — you will need it to prove S-corp status to your state tax authority, your CPA, and potentially future buyers of your business. If you do not receive the letter within 90 days, contact the IRS.

What is a reasonable salary for an S-corp owner in DC, VA, or MD?

The IRS requires a salary comparable to what you would pay someone else to perform your role. For professional services businesses in the DMV area, this typically ranges from $60,000–$120,000 depending on the nature of services, time devoted, and revenue level. Setting the salary too low relative to distributions is the most common S-corp audit trigger.

Do I need to notify Virginia, Maryland, or DC separately?

Virginia automatically recognizes the federal S-corp election — no separate state form is required. Maryland requires filing Form 510 within 60 days of federal approval to notify the Comptroller. Washington DC automatically follows the federal S-corp status — no separate DC form is needed.

How much can I save in taxes with S-corp status?

Savings depend on profit level and reasonable salary. At $100,000 net profit with a $60,000 salary, self-employment tax savings are roughly $6,000–$7,000 per year. At $200,000 profit, savings can exceed $12,000 per year. These savings must be weighed against additional compliance costs (payroll, Form 1120-S filing) of approximately $1,500–$3,000 annually.

Last Updated: May 2026

How to Elect S-Corp Status

Filing IRS Form 2553 is simpler than most business owners think — but the deadline and payroll setup must be done correctly. Here is the complete guide for DC, Virginia, and Maryland businesses.

How do I elect S-corp status for my LLC or corporation?

To elect S-corp status, file IRS Form 2553 (Election by a Small Business Corporation) signed by all shareholders. For a new entity, file within 75 days of formation. For an existing entity, file by March 15 to apply to the current tax year. The IRS will send a CP261 approval letter within 60 days.

Key Definitions

Form 2553: The IRS Election by a Small Business Corporation form — the document that formally requests S-corporation tax treatment for a domestic LLC or corporation. It must be signed by all shareholders and filed by the applicable deadline. There is no online filing option; it must be mailed or faxed to the IRS Service Center for your state.

Reasonable Compensation: The salary S-corp owner-employees must pay themselves before taking distributions. The IRS requires this salary to reflect fair market value for the services performed — roughly what you would pay an arm's-length employee to do the same work. Salary that is unreasonably low relative to distributions is the most common S-corp audit trigger.

5 Steps to Elect S-Corp Status

1
Verify S-corp eligibility requirements
Confirm your entity meets all IRS requirements: a domestic LLC or corporation, 100 or fewer shareholders, only one class of stock, all shareholders must be US citizens or permanent residents, and no partnerships or C-corporations as shareholders. Most small business owners in DC, MD, and VA easily qualify.
2
Obtain and prepare IRS Form 2553
Download Form 2553 (Election by a Small Business Corporation) from IRS.gov. Complete Part I (entity information, election effective date) and Part II if required. Every current shareholder must sign the consent statement in column K of the shareholder list.
3
File Form 2553 by the applicable deadline
Mail or fax Form 2553 to the IRS Service Center listed in the form instructions for your state. Certified mail with return receipt provides proof of timely filing. There is no online filing option for Form 2553. Keep a copy of the signed form and your mailing receipt.
4
Wait for the IRS CP261 approval letter
The IRS will mail a CP261 Notice of S Corporation Acceptance letter within 60–90 days. Store this letter permanently in your business records — you will need it to prove S-corp status to state tax authorities, your bank, your CPA, and any future buyers of your business.
5
Set up owner payroll immediately
From the effective date of your S-corp election, run W-2 payroll for yourself. Register as an employer with the IRS (if not already done), set up EFTPS for federal tax deposits, and register with your state tax authority. Your CPA or payroll service can help establish a reasonable salary and payroll schedule.

S-Corp Election Deadlines by Scenario

Feature	Deadline	Notes
New LLC/Corp (current year)	Within 75 days of formation	Most common — file immediately when you form the entity
Existing entity (next year election)	By December 31 of the prior year	Or anytime — effective next January 1
Existing entity (current year election)	By March 15 of the current year	Must have all shareholder signatures
Late election (missed deadline)	File Form 2553 with reasonable cause statement	IRS grants relief if you acted like an S-corp all year
Virginia state recognition	Automatic upon federal approval	File copy with Virginia Department of Taxation
Maryland state recognition	File Form 510 within 60 days of federal election	Maryland requires separate notification
DC state recognition	Automatic — DC follows federal S-corp status	No separate DC form required

S-Corp Eligibility Checklist

All of these must be true before filing Form 2553:

Domestic entity (incorporated or organized in the United States)
100 or fewer shareholders
Only one class of stock (differences in voting rights are permitted)
All shareholders are US citizens, permanent residents, or qualifying trusts/estates
No partnerships, corporations, or non-resident aliens as shareholders
Not an ineligible corporation (financial institution, DISC, insurance company)

DC, Maryland, and Virginia State Requirements

Washington, DC

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

Maryland

File Form 510 with Maryland Comptroller within 60 days of federal approval
Maryland PTET election available — may offset SALT cap impact
8% pass-through entity tax with offsetting credit for shareholders

Virginia

Automatically recognizes federal S-corp status — no separate VA form
No Virginia S-corp franchise tax (LLC/S-corp parity)
Virginia PTET election available for pass-through entities

Want Us to Handle Your S-Corp Election?

Our CPAs file Form 2553, calculate your reasonable salary, set up payroll, and manage ongoing S-corp compliance. We serve small businesses throughout DC, Maryland, and Virginia.

Frequently Asked Questions

Related Guides & Services

LLC vs. S-Corp Comparison|How to Set Up Payroll|Tax Preparation|S-Corp Savings Calculator

Ready to Elect S-Corp and Start Saving?

Our virtual CPAs handle everything: Form 2553 filing, reasonable salary determination, payroll setup, and year-round S-corp compliance. Serving DC, Maryland, and Virginia businesses.