Guiding Sole Proprietors to an S-Corp: A Payroll GTM Guide for Check Partners
A guide to educating sole proprietors on S-Corp readiness and payroll timing
Guiding Sole Proprietors to an S-Corp: A Payroll GTM Guide for Check Partners
Why This Guide Exists
Many sole proprietors using your core product are not running payroll today. That does not mean payroll is not relevant. It means they have not reached the inflection point yet. One of the most impactful GTM levers for a Check partner is helping customers recognize when becoming an S-Corp makes sense and why payroll becomes a required step in that journey.
This guide outlines how to educate, not advise, and how to position payroll as a natural milestone in business growth.
Important: Check partners should never provide legal, tax, or financial advice. All guidance should be framed as general information and paired with a recommendation to consult a CPA or attorney.
Sole Proprietorship vs. S-Corporation: What Is the Difference?
Sole Proprietorship (Sole Prop)
A sole proprietorship is the default business structure for many small businesses.
Key characteristics:
- The business and the owner are legally the same
- Business income is reported on the owner’s personal tax return
- Owners pay themselves through owner’s draws, not payroll
- There is no requirement to run payroll for the owner
Because there is no separation between the owner and the business, sole proprietors do not take a W-2 paycheck and typically do not use payroll software unless they have employees.
S-Corporation (S-Corp)
An S-Corp is a tax election that creates separation between the business entity and the owner.
Key characteristics:
- The business is a separate legal entity
- Owners who actively work in the business must pay themselves a reasonable salary
- That salary must be paid through payroll
- Additional profits can be taken as distributions
This is the point where payroll becomes mandatory rather than optional.
Why This Matters for Payroll GTM
Payroll is not something a sole proprietor needs on day one. It becomes necessary when:
- The business is consistently generating revenue
- The owner is actively working in the business
- The business elects S-Corp status
Your GTM motion should focus on helping customers recognize this transition moment.
Why Becoming an S-Corp Is Often Better at $75,000 or More in Revenue
Once a business reaches approximately $75,000 in annual revenue, many owners begin exploring whether an S-Corp structure makes sense. While every situation is different, there are two commonly discussed benefits.
Personal Liability Considerations at a High Level
As a sole proprietor:
- The owner is personally liable for business debts and obligations
- Personal assets may be exposed in certain situations
With an S-Corp:
- There is clearer separation between the owner and the business
- The business operates as its own entity
This separation is one reason many growing businesses consider incorporating, though exact protections vary and should always be discussed with a professional.
Tax Efficiency at Higher Revenue Levels
In a sole proprietorship:
- All business profit is typically subject to self-employment taxes
In an S-Corp:
- The owner pays themselves a reasonable salary through payroll, which is subject to payroll taxes
- Remaining profits can often be taken as distributions that are not subject to payroll taxes
As revenue increases, this structure can result in meaningful tax efficiencies for some business owners. This is especially true once revenue exceeds approximately $75,000 annually.
This information is contextual and not universal, which is why partners should always encourage customers to consult a CPA.
How Check Partners Should Talk About This and What to Avoid
What Partners Should Do
- Educate customers on common business growth milestones
- Explain when payroll becomes required
- Frame S-Corp discussions as a question to explore, not a recommendation
- Encourage conversations with a CPA or tax professional
- Position payroll as a simple operational step once an S-Corp is formed
Example positioning:
“Many businesses start exploring S-Corp status once they reach consistent revenue. If you ever make that transition, payroll becomes required, and that is something we can make very easy.”
What Partners Should Not Do
- Recommend a specific entity structure
- Estimate tax savings
- Define what a reasonable salary should be
- Provide legal, tax, or financial advice
- Position payroll as something they should do today if they are not ready
Setting the Stage for Conversion: What Comes Next
This article is the education layer of your GTM motion. Once customers understand:
- Why sole proprietors do not run payroll
- When payroll becomes mandatory
- Why S-Corp status is commonly considered at higher revenue levels
You can reinforce the message with:
- In-app prompts triggered by revenue milestones
- Educational emails and lifecycle campaigns
- Sales talking points and scripts
- Simple landing pages explaining what happens if they become an S-Corp
The goal is not to push payroll early. It is to ensure that when the moment arrives, your product is the obvious next step.
Final Takeaway for Check Partners
Guiding sole proprietors toward understanding S-Corp readiness is one of the most powerful long-term payroll GTM strategies.
Educate early.
Avoid advice.
Anchor payroll to natural business growth.
Marketing - The Benefits of S-Corp
This document provides templated content for a product-led marketing campaign to move customers from a non-payroll business structure (single member LLC / sole proprietor) to an S-Corp.
The first section of this document provides 10 themes a marketing team can use to create their own content marketing with the second section providing in-app prompts and the third section giving templated single-drip emails for each theme.
Themes
Using themes in marketing campaigns is essential for creating coherent, focused content that resonates with a specific audience. A marketing lead can leverage these 10 themes on the advantages of S-corps to craft targeted campaigns that educate, engage, and prompt small business owners to consider restructuring for optimal tax and operational benefits.
- Understanding S-Corp Basics: An introductory email explaining what an S-corp is, how it differs from other business structures, and the basic requirements for setting one up.
- Pass-through Taxation Explained: Detail how S-corps benefit from pass-through taxation, meaning profits and losses pass directly to shareholders' personal tax returns, avoiding double taxation.
- Salary vs. Dividend Distributions: Discuss the advantages of splitting income between salary and dividends to potentially lower overall tax obligations.
- Reducing Self-Employment Taxes: A deep dive into how S-corp shareholders can save on self-employment taxes compared to sole proprietors and partnership entities.
- Health Insurance Deductions: Explain how S-corp owners can deduct health insurance premiums paid on behalf of themselves and their employees, reducing taxable income.
- Accountable Plan Benefits: Explore the benefits of setting up an accountable plan to reimburse employees for business expenses, which can be tax-free to the employee and deductible for the business.
- Retirement Planning Perks: Overview of how S-corps can set up retirement savings plans that benefit both the business owner and employees, with potentially higher contribution limits.
- Asset Protection Strategies: Discuss the legal structure of S-corps that offers protection to owners' personal assets from business liabilities.
- Estate Planning and Business Continuity: Explain how owning an S-corp can simplify estate planning and facilitate business continuity, including easy transfer of ownership shares.
- State-Specific Advantages and Considerations: Tailor content to explain how S-corp status interacts with specific state tax laws, which can be a deciding factor for many small business owners depending on their location.
These themes not only help educate small business owners about the benefits of S-corporations but also engage them by addressing their potential concerns and providing actionable insights.
In-App Prompts
In-app prompts are a powerful tool in product-led marketing, serving to engage users directly within the application environment and guiding them towards key features or benefits. A marketing lead can utilize these 10 concise in-app prompts to effectively highlight the advantages of S-corp structures, encouraging users to explore and adopt payroll solutions that enhance their business operations and tax efficiency.
- Understanding S-Corp Basics: "Discover how S-corps operate and benefit your business!"
- Pass-through Taxation Explained: "Learn to avoid double taxation with S-corp pass-through benefits!"
- Salary vs. Dividend Distributions: "Maximize your earnings: Optimize salary and dividend splits!"
- Reducing Self-Employment Taxes: "Cut self-employment taxes significantly through S-corp status!"
- Health Insurance Deductions: "Reduce taxable income with health insurance deductions. Find out how!"
- Accountable Plan Benefits: "Implement an accountable plan; save on taxes, reimburse smarter!"
- Retirement Planning Perks: "Boost your retirement savings with S-corp structures!"
- Asset Protection Strategies: "Protect personal assets with smart S-corp structuring!"
- Estate Planning and Business Continuity: "Simplify estate planning and ensure business continuity with S-corps!"
- State-Specific Advantages and Considerations: "Tailored S-corp benefits for your state; learn the key advantages!"
These taglines are designed to engage users by highlighting key benefits succinctly and prompting them to learn more or take action.
Email Campaigns
Email campaigns are a vital strategy for engaging current clients, providing personalized content that educates and retains their interest over time. By utilizing these 10 strategically crafted emails, a marketing lead can effectively highlight the benefits of S-corp structures, encouraging clients to consider new solutions that could optimize their business operations and tax strategies.
1. Understanding S-Corp Basics
Dear [Client's Name],
Discover the basics of S-corporation and how it differs from other business entities. An S-corp offers significant tax advantages and flexibility in business operation that might be ideal for your business structure. Knowing these basics can help you make informed decisions that align with your business goals.
Ready to take the next step? Let's get your payroll started as an S-corp and position your business for streamlined success. Contact us today!
2. Pass-through Taxation Explained
Hello [Client's Name],
Did you know that as an S-corp, your business can enjoy the benefits of pass-through taxation? This means profits and losses are reported directly on your personal tax returns, avoiding the burden of double taxation. It's a strategic way to handle your business finances more efficiently.
Let’s discuss setting up your payroll under an S-corp to maximize these tax advantages. Reach out to start the conversation!
3. Salary vs. Dividend Distributions
Hi [Client's Name],
Optimizing how you split your income between salary and dividends can significantly reduce your tax obligations. An S-corp allows you to strategically balance these distributions for tax efficiency. This planning is crucial for maximizing your take-home profits.
Interested in restructuring your payroll to benefit from these savings? Contact us to convert your business payroll to an S-corp model.
4. Reducing Self-Employment Taxes
Dear [Client's Name],
As an S-corp, you can dramatically reduce your self-employment taxes compared to other business structures. This setup allows you to draw a reasonable salary while distributing remaining profits as dividends, which are not subject to self-employment taxes.
Let's get your payroll structured as an S-corp to start saving on taxes. Call us today to make the switch!
5. Health Insurance Deductions
Hello [Client's Name],
An S-corp can help you deduct health insurance premiums for yourself and your employees, directly reducing your taxable income. This benefit not only supports your financial health but also provides valuable perks to your team.
To take advantage of this, why not start your payroll as an S-corp? Get in touch with us to find out more.
6. Accountable Plan Benefits
Hi [Client's Name],
Implementing an accountable plan within your S-corp can offer tax-free reimbursements on business expenses for you and your employees. This not only saves you money but also simplifies your tax reporting.
Interested in these benefits? Let’s transition your payroll to an S-corp framework. Contact us to get started!
7. Retirement Planning Perks
Dear [Client's Name],
Enhance your retirement planning with an S-corp structure. This setup allows for potentially higher contributions to retirement plans, benefiting both you and your employees with greater future security.
Ready to restructure your payroll to leverage these perks? We’re here to help guide you through the process.
8. Asset Protection Strategies
Hello [Client's Name],
Protecting your personal assets is crucial, and an S-corp provides a layer of security by separating your personal liabilities from business debts. This legal structure safeguards your personal assets while allowing your business to operate freely and securely.
Consider starting your payroll as an S-corp to benefit from these protections. Let’s discuss how this can be tailored for your business.
9. Estate Planning and Business Continuity
Hi [Client's Name],
An S-corp can simplify your estate planning and enhance business continuity. By setting up your business as an S-corp, you ensure smoother transitions and easier management of business shares.
To utilize these advantages, why not start your payroll as an S-corp? Contact us to explore how this can be set up for your specific needs.
10. State-Specific Advantages and Considerations
Dear [Client's Name],
Each state has unique benefits for S-corps, from tax incentives to local business advantages. Understanding these can significantly impact your decision to choose an S-corp structure.
Let's start your payroll as an S-corp to optimize these state-specific advantages. Reach out to us for a personalized consultation and get started today!
Each email is crafted to highlight specific benefits and encourage action towards setting up or transitioning to S-corp payroll structures.
Last updated on December 17, 2025