Los Angeles S Corp CPA: 5 Questions to Ask First

Los Angeles S Corp CPA: 5 Questions to Ask First

An S corporation is a tax election, not a business type, and it only pays off when someone runs it correctly all year. A Los Angeles S corp CPA does more than file the return: the work includes payroll for the owner, California's separate tax on S corporations and a running record of what you have put in and taken out.

The five questions below are a sequence to work through before you hire, not a ranking.

Three Sam's List partners list a Los Angeles area base. Doug Johnson CPA, a Los Angeles firm for growing businesses with $250,000 to $10 million in revenue and for high earners with equity compensation, is the one written up here. The other two, Ever Ledger and Good Operator, are named and linked only. Every firm named is a vetted Sam's List member. The firm written up below is a paying member of our featured program, and payment does not buy the language we use or its reviews. You can read how we picked this firm at the end.

1. Who Sets S Corp Reasonable Compensation, and How Is It Documented?

If you work in your S corporation, the IRS generally expects you to be paid reasonable wages through payroll before you take distributions. Wages carry payroll tax and distributions generally do not, which is why this is the first place the IRS looks. Ask who decides the salary and what the decision is based on.

A good answer names the duties you perform, what comparable work pays and a written note of the reasoning, kept with your records. A weak answer is a round number picked once and never revisited. Ask also who runs the payroll itself: the CPA, a payroll provider the CPA coordinates with or you.

The limitation: there is no single formula for S corp reasonable compensation, and a CPA's number is a judgment that the IRS can disagree with. Ask how the firm supports its number if it is questioned.

2. How Does a Los Angeles S Corp CPA Handle the California S Corp Franchise Tax?

California does not treat an S corporation as fully tax free. S corporations generally pay a franchise tax of 1.5 percent of net income, with an $800 minimum annual franchise tax. The $800 can be due in a year with little or no profit. Shareholders also report their share of income on their personal California returns.

Ask your CPA to show the California S corp franchise tax on your own numbers, and ask when the payments and the return fall due. Ask too whether the firm looks at California's elective pass-through entity tax each year and who decides whether to elect it. Those rules have changed over time, so a firm that checks them annually is a better sign than one that quotes a number from memory.

The limitation: rates, minimums and elections change. Confirm current figures with the California Franchise Tax Board, and with the City of Los Angeles for its business tax, which is a separate bill from the state's.

3. Who Tracks Basis and Distributions for Your Los Angeles S Corp CPA File?

Your basis in the S corporation is a running figure: what you paid in, plus your share of income, minus losses and distributions. It decides how much you can take out tax free and how much loss you can deduct. Nobody notices it until a loss or a large distribution shows up.

Ask who keeps the basis record, how often it is updated and whether the firm completes the IRS basis form for shareholders when it applies. Ask also how owner loans and distributions are coded in the books, because a distribution booked as a salary or the reverse can cause trouble later.

The limitation: basis depends on clean records of every contribution and withdrawal. A CPA can only track what your books show, so ask what the firm needs from you each quarter.

4. What Does the CPA Do Between Filings?

A return summarizes a year that is already over. What helps an S corp owner is a conversation before year end, when payroll, estimated payments and distributions can still change. Ask what the engagement includes, how many check-ins a year it has and who answers a question in July.

Also ask what is billed separately: bookkeeping, payroll, amended returns, notices. A firm that prepares returns is not always the one that keeps your books, so get the scope in writing. If your books are behind, ask whether the firm will fix them or expects clean records on day one.

The limitation: more contact usually costs more, and a lighter engagement may be right for a simple company. Ask for the scope and the price together.

5. How Will the CPA Tell You When the S Election Stops Paying?

An S election saves payroll tax on distributions, but it adds a payroll, a second return and a California tax. For a small or inconsistent profit, those costs can outweigh the savings. For a business that is growing fast, the balance can shift in the other direction, and so can the right structure.

Ask when and how the firm reviews the election. A useful answer is an annual comparison of your actual numbers, not a general statement that S corporations save money. Ask what facts would make the firm suggest changing course.

The limitation: no firm can promise savings. The answer depends on your profit, your pay, your state taxes and the rules in force, and a good CPA will say so.

Where Doug Johnson CPA Fits

Doug Johnson CPA is a Los Angeles firm, founded in 2024, with three employees, serving clients nationwide. Its live profile positions the firm for growing businesses in the $250,000 to $10 million revenue range and for high earners with equity compensation, and lists SMB Owners, Equity Compensation, High Net Worth Individuals and Growing Companies as specialties.

Doug Johnson CPA has 15 verified client reviews on Sam's List. Each review is submitted by an individual who identifies as a client of the firm and rates it on communication, subject-matter knowledge, and overall satisfaction. Reviews reflect those individual experiences and do not represent an endorsement by Sam's List. Doug Johnson CPA is a paying member of our featured program, and payment does not buy its reviews. Ratings and rankings are not indicative of future performance or results.

The limitation, plainly: the profile does not mention S corporations, payroll or the California franchise tax by name, so ask what the firm does and how many S corps it supports. It lists minimums of $250,000 in income and $250,000 in revenue, so a smaller owner may fall outside what it takes on. It is a three-person firm, so ask who your day-to-day contact would be.

Frequently Asked Questions

What does a Los Angeles S corp CPA do?

A Los Angeles S corp CPA prepares the federal and California S corporation returns and your personal returns. Many also advise on owner payroll, estimated tax payments, distributions and basis. What is included varies by firm, so ask which jobs are in the fee and which are billed separately.

What is reasonable compensation for an S corp owner?

It is the pay a business would give someone for the work you do, and the IRS expects an owner who works in the company to take it as wages. There is no fixed percentage. Your CPA should document the reasoning from your duties and comparable pay.

Does California tax S corporations?

Yes, at the entity level. S corporations generally pay a 1.5 percent tax on net income with an $800 minimum annual franchise tax, and shareholders also report their share of income personally. Confirm current rules and any pass-through entity tax election with the California Franchise Tax Board.

When should an owner reconsider an S election?

When the added payroll, return and California costs approach the savings, or when your income, ownership or plans change. Ask your CPA for a yearly comparison on your own numbers instead of relying on a general rule.

Before you call anyone, pull your last two returns, your latest payroll report and a list of what you took out of the company this year. You can browse accountants on Sam's List, including the firms above, and ask each how it sets S corp pay.

How We Picked This Firm

You should be able to check our work, so here is how this post was built.

The pool. The roster is the Sam's List partners that list a Los Angeles area base as of September 14, 2026: Doug Johnson CPA, Ever Ledger and Good Operator. One firm is written up. The other two are named and linked only, with no write-up and no recommendation. This is not a survey of every Los Angeles CPA, and many firms not on Sam's List could fit.

How it is organized. The five questions are a sequence, not a ranking. Doug Johnson CPA is written up because it is the only firm on that roster in our featured program.

What review counts mean here. We cite Doug Johnson CPA's verified review count and its date from its profile. A count shows how many clients wrote something down. It does not measure technical quality.

What payment does and does not buy. Listing on Sam's List is free, and so is being named in this article. The firm written up here is a paying member of our featured program, which is why it gets a write-up. What payment does not buy is the language we use about a firm, its review count, or a promise that it fits you.

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About the author: Kimberly Green is the cofounder of Sam's List, where business owners and high earners find vetted CPAs, financial advisors, and fractional CFOs. She's met one-on-one with 400+ financial professionals and writes from the real data behind thousands of client-advisor matches. Ask her anything about finding an accountant - she's heard it all, including the questions people are afraid to ask.