Bookkeeping for S-Corps

Once you elect S-Corp status, the IRS expects clean monthly books, owner payroll, and disciplined distributions. Here's exactly what changes.

What changes the day you elect

  • You become a W-2 employee with reasonable comp salary.
  • Distributions replace owner draws.
  • Form 1120-S replaces Schedule C (due March 15).
  • Monthly close is no longer optional.

Owner payroll setup

  • Use a real payroll provider (Gusto, ADP, Rippling).
  • Document reasonable compensation.
  • Withhold and remit federal/state payroll taxes.
  • File 941, W-2, W-3 on schedule.

Accountable plans

Set one up so the S-Corp can reimburse you tax-free for legitimate business expenses paid personally — home office, mileage, cell phone, internet.