S-corp for adult family homes
Should your adult family home be an S-corp?
For some AFH owners, an S-corp election lowers self-employment tax year after year. For others, especially owners who live in the home, it can cost more than it saves. Find out which one you are before anything gets filed.
No charge for the consultation unless you decide to file.
One example
Why it is different
An adult family home is not a typical small business.
Most S-corp advice is written for consultants and contractors. Three things make the decision different for an AFH owner.
You may live where you work
If you live in the home with Medicaid residents, some of those payments may fall under the difficulty-of-care exclusion (IRS section 131). How the business is set up matters to that. It has to be weighed before an S-corp, not after.
Your salary has to make sense
An S-corp owner who works in the business must take a reasonable wage. For an AFH owner that means real duties: caregiving hours, administration, on-call nights. The number needs a written basis.
Your license is tied to your entity
Changing the legal form of the business that holds an AFH license is a change of ownership to DSHS. That belongs in the decision from the start.
The numbers
Same home, same profit, two ways to be taxed.
An owner who does not live in the home, with $120,000 of profit before paying herself.
LLC, taxed the default way
Same LLC, S-corp election
Then the costs that come with it
Getting started is a one-time $450 for the consultation and filing the S-corp election. You only pay if you file. A smaller paycheck also means smaller Social Security credits for retirement, and we go through that with you.
Run this on my homeIllustration only. Rounded federal figures and 2026 Washington premium rates. The paycheck must be reasonable for the work you do.
Who can elect
Who can elect S-corp status
- The business is a U.S. LLC or corporation. A sole proprietorship has to form one first.
- No more than 100 owners, and one class of ownership.
- Owners are individuals who are U.S. citizens or U.S. tax residents, or certain trusts and estates. Not other companies.
- Form 2553 is filed on time. For 2027 that is generally March 15, 2027. Late-election relief exists in some cases.
Want your first S-corp paycheck in January? The time to decide is this fall, so payroll is ready on day one.
The process
From question to first paycheck
Your profit, whether you live in the home, the difficulty-of-care exclusion, how your license is held, and how many owners there are.
Your own numbers side by side, a salary figure with its basis, and our reasoning. Where the rules are not settled, we say so.
If you go ahead, we prepare and file Form 2553 and line up the start date with your payroll. This is the only point the $450 is due.
You go on the same payroll as your caregivers.
Payroll
Whatever the answer, payroll has to be right.
If an S-corp fits, the savings depend on an owner paycheck that runs correctly every month. If it does not, your caregivers still need to be paid correctly. Either way, that is the work we take off your hands.
- Owner and caregivers on one payroll
- Federal and Washington payroll filings
- Paystubs and 48-hour direct deposit
- Year-end W-2s
- Already with a payroll provider? We handle the move.
Payroll for an adult family home is a flat $100 a month. No charge per employee, so adding yourself does not raise your bill.
Start with a consultationQuestions
Questions AFH owners ask us
A real person answers, by phone, email or WhatsApp.
Request a consultationNot automatically. But if part of your Medicaid income may qualify for the difficulty-of-care exclusion, restructuring can affect it. We look at that first and the S-corp second.
A wage in line with the work you actually do in the home, paid before you take other money out. We build it from your duties and hours and put the reasoning in writing.
Not necessarily. The IRS has a relief procedure for late elections when certain conditions are met. We check whether it fits your situation.
If your license is already held by an LLC or corporation, the election is a tax change only. If your license is in your own name, moving it to a new entity means a new license application with DSHS and advance notice to residents. We map out that cost and timing first.
Consultation
Find out where your home stands.
Pick a time for your consultation. We go through your numbers together and give you our recommendation in writing.
See open times and pick the one that suits you. It takes about a minute.
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Recommendation in writing. You only pay if you file. Illustrations are general information, not tax advice.