How a Burbank Film Editor Saved $11,400 Annually with an S-Corp Election

Client Profile

Industry: Film Post-Production
Location: Burbank, CA
Net Profit: $145,000
Filing Status: Single

The Challenge

A Burbank-based film editor working on projects for Netflix, Disney, and independent films was operating as a sole proprietor. She received multiple 1099s from different production companies throughout the year and had no formal tax strategy beyond paying what her previous tax preparer calculated.

She was paying approximately $20,500 annually in self-employment taxes on $145,000 of net profit — on top of regular income tax. She had heard about S-corporations from other editors but did not understand when it made sense or how to set it up properly.

The Solution

We analyzed her income, expenses, and tax situation and recommended S-corporation election. Here is what we implemented:

S-Corp Setup

• Filed Form 2553 for S-corp election with the IRS
• Set up monthly payroll
• Established reasonable compensation at $85,000/year based on comparable film editor wages in Los Angeles
• Documented the reasonable comp analysis for IRS compliance
• Set up QuickBooks Online for proper bookkeeping
• Created opening balance sheet

Timeline

Week 1: Consultation and engagement
Week 2: S-corp election filed, payroll setup, reasonable comp study
Week 3-4: Bookkeeping system implemented, first payroll run
Total setup time: 14 days

The Numbers

Before S-Corp (Sole Proprietor):

Net profit: $145,000
Self-employment tax (15.3%): $20,462
Income tax: ~$24,000
Total tax: ~$44,462

After S-Corp:

W-2 wages: $85,000
Payroll taxes (FICA): $6,503
Distributions: $60,000 (no self-employment tax)
Income tax: ~$24,000 (similar)
Total tax: ~$30,503

Annual Savings: $13,959

Ongoing Costs

Monthly bookkeeping + payroll: $450/month ($5,400 annually)
Net annual savings after ongoing costs: $8,559

Client Testimonial

"I was skeptical about S-corp at first because it sounded complicated. But the setup was painless, and the monthly bookkeeping takes care of everything. I save over $8,000 per year after all costs, and I actually understand my business finances now. Worth every penny."

Key Takeaways

• S-corp generally makes sense when net profit exceeds $80,000
• Ongoing compliance is required: monthly payroll, bookkeeping, and annual business tax return
• Proper reasonable compensation is critical to avoid IRS scrutiny
• Entertainment professionals working on 1099 are ideal S-corp candidates

Ready to see if S-corp makes sense for you? Schedule a free S-corp consultation and we will calculate your exact savings.