Frequently Asked Questions

Lettuce is ideal if you want a system that helps you run a more profitable business. Lettuce makes this happen by setting you up as an LLC, filing your S Corp election, and making the system work in your favor. If you want a system that takes care of the complicated bookkeeping, payroll, accounting and compliance required to be more profitable, Lettuce is the right choice for you. Today, Lettuce is best for companies that do the following types of work: consulting, creative work, coaching, software development, therapy, or legal services.  If you sell services, and don't have any full-time employees Lettuce will be a good fit.

Lettuce specializes only in taxes and accounting for solopreneurs, freelancers and businesses-of-one. Our recommendations are tailored to their needs, and personalized for each individual business based on what you earn, what you spend, and what your goals are. No other platform offers this uniquely specialized guidance, and automates the work for you.  With Lettuce you can focus on running your business instead of spending your time on bookkeeping and accounting.

It takes about 10 minutes to provide Lettuce with all of the information that is needed to set up your business as an LLC, file your S Corp Election, and open your business bank account.

In the waiting period after you signup with Lettuce, your LLC is being set up in your state of operation, your S Corp election is being filed with the IRS, Lettuce obtains an EIN for your business (An EIN is an Employer Identification Number--it's like a Social Security number for your business) and your business bank account is being opened.  This time period can be variable, and is determined by the paperwork processing times in your state.

This depends a bit on how you want to run your business. If you want to check your income statement on a regular basis, or see what deductions are being classified, you can login as often as you like. You will have quarterly taxes to approve and pay, or you can choose to automate this with Lettuce. Towards the end of the year, Lettuce will balance your salary and owner's distribution based on your total income, and prepare your business tax return for you to approve. All of this takes minimal time.  About thirty minutes every month.  

Lettuce automates and streamlines financial tasks like bookkeeping, accounting, tax filing and payroll instead of doing them manually. In addition, Lettuce works every day, to understand every dollar in your business. This enables us to be proactive about making recommendations and capturing every optimization.

Lettuce takes care of all of your business taxes and bookkeeping. At the end of the year, Lettuce will file your business taxes, and provide you with a W-2 to file your personal taxes. If your personal taxes are more complex, and you have assets beyond your W-2, you may still want to have an accountant or CPA help you file. However, the time and cost will be dramatically reduced because your business taxes will already be completed.

Lettuce accommodates both freelance and W-2 employees; specific setup details are provided upon engagement.

You are free to end your Lettuce subscription at any time. Your S Corp and LLC belong to you, even after you terminate your Lettuce subscription. You are still responsible for compliance and taxes of your business entity. To cancel, send an email to support@lettuce.co informing us of your desire to cancel. Remember to move all your funds from your business bank account, cancel or move all your scheduled bank pending payments.

Discontinuing an S corp involves following legal dissolution procedures. You will need to submit a statement of revocation to the IRS service center where you file your annual return. You can find the IRS instructions here.

Lettuce can support businesses that hire freelancers.

If your clients pay you by check, you can scan the check to deposit it into your Lettuce account.

There is no setup fee for Lettuce; you can start using our services without any upfront costs. Lettuce covers the cost for setting up your LLC, your S Corp, getting your EIN and opening your business bank account. When you get paid and put those funds in your business bank account, Lettuce starts charging for our services.

Lettuce does not require a monthly payment until your business earns income. Your Lettuce subscription fee will be automatically deducted from your Tax & Fees Withholding Account after your promotional free period ends and you have enough funds in your account.

We are so confident in our work that if you don’t save on your taxes, we will refund your fees. To learn more, see our Guarantee page.

It can be. It depends a bit on your priorities. Lettuce can benefit your business if you earn less than $100K. Lettuce costs $299/month. To break even using Lettuce, you need to be making about $65,000/a year. Your savings will equal your tax deductible cost for using Lettuce. As your income increases, your savings will increase. Starting at around $70,000 your savings will exceed the cost of setting up and maintaing your S Corp with Lettuce.

Sole proprietorship is the default mode of many businesses-of-one. If you do nothing to officially set up your business with your state of operation, you file as a sole proprietor by default. Sole proprietorship is easy to maintain, but offers no liability protection or tax benefits. An LLC takes some effort to set up and has some compliance requirements, and also offers you liability protection if you correctly separate your personal and business finances. An S Corp is a tax status that you file with the IRS. It allows you to significantly reduce your self employment taxes (saving thousands), and also has some complex compliance requirements. Lettuce takes care of all of this for you. To learn more, read our blog posts on the differences between sole proprietorships and LLCs, and on the benefits of S Corps.

Yes, you can switch from a sole proprietorship to an S Corp, typically by filing IRS Form 2553 after incorporating your business. Lettuce takes care of this for you after setting up your LLC.

In order to have an S Corp, the IRS requires that you be first legally recognized as an LLC by your state of operation. The LLC legally to establishs your business, and offers personal liability protection. When electing to be taxed as an S Corp, your LLC can combine the liability protection with the tax benefits of an S Corp, optimizing both legal and tax advantages.

This requirement is called an initial capital contribution; it's an investment used to start the business, covering initial expenses and establishing your financial commitment to the LLC.

This process can feel stressful, but doesn't have to be. Here's why: Lettuce asks you to choose several names for your business, because your state requires registering a name that has not been registered before. Think about something unique to you or your business when choosing a name. If the name you register is not the name you wanted, you can file a form with your state to create a DBA or "Doing Business As" name. You can be a named LLC that does business as another name.

Once you are set up with your LLC, S Corp, and a new EIN (An EIN is an Employer Identification Number--it's like a Social Security number for your business), you will need to send your clients a new W9. This new W9 will indicate that you are an S Corp, and will use your EIN number instead of your Social Security number. You can get a W9 from the IRS here.

Lettuce incorporates your business as an S Corp, saving you thousands in taxes. Working with Lettuce significantly reduces your Social Security and Medicare tax payments, maximizes your deductions, and ensures you take advantage of tax savings opportunities in areas like healthcare and retirement planning.

Lettuce continuously tracks and categorizes expenses. Every day, we evaluate every dollar in your business, ensuring you are able to maximize tax deductions all year round.

One key tax benefit of operating as an S Corp is the reduction in Social Security and Medicare taxes that S Corps enable. Instead of paying 15.3% on your total income, an S Corp sets you up to pay that tax on just a portion of your income, saving you thousands. Once your S Corp is established, Lettuce will make additional recommendations around maximizing deductions, retirement planning and healthcare spending that will result in additional tax benefits.

Nothing. Lettuce is managing your taxes proactively every day, looking at every dollar of income and expense automatically. Everything is kept updated in real time throughout the year, so that your balance with the IRS is as close to zero as possible. The work and anxiety around tax season disppears with Lettuce. When the time comes, we will send you all the info needed to file your tax return, including the business tax filing form 1120S and Schedule K1.

Lettuce uses automated systems and expert oversight to maintain accuracy in all tax calculations and filings.

Payroll is essential for S Corp owners to comply with IRS requirements. The IRS requires that you pay yourself a "reasonable salary" as an S Corp. You need to keep records of your payments, withhold the correct Social Security and Medicare taxes, and file and pay payroll taxes. Lettuce takes care of all of this for you when you become a member.

Deductions can reduce your taxable income. When you are taxed on a smaller base, it helps you pay less tax. Business expenses should be deducted to maximize your savings. Depending on your industry, where you work, and what kinds of expenses you have, deductions can be complex. Lettuce takes care of all of this for you.

S Corps can be started any time. The financial benefits of an S Corp begin only after you make the election. If you are a sole proprietor, and establish your LLC and S Corp in June, you can only get the tax benefits from June forward. At year-end, your individual tax return for that year will show income as sole proprietor (Schedule C) for the first part of the year, and as a pass-through business entity (S Corp) for the second part of the year. Lettuce will take care of your business taxes from June on. If you have an LLC already, you can set up your S Corp election at any time, and for that existing LLC, and Lettuce will take care of your business taxes from that point on.

Lettuce handles your business taxes and provides you with a W-2. This dramatically simplifies your tax return compared to filing as a sole proprietor or LLC. If you have significant assets beyond your W-2, you may still want to consult with an accountant or CPA. If not, it will be easy to file using a standard service or filing with the IRS directly.

You are always in control of what you pay. Lettuce will create a recommended estimate each quarter, based on what you've earned. You can decide to pay that amount, or pay less. You can decide to pay nothing and wait until the end of the year. It is important, when making this decision, that you take into account potential penalties. In 2024, the IRS penalty for not paying estimated taxes on time, is 8%. That can add up to thousands of dollars over the course of the year.

It depends. If you have two separate businesses with two separate customer-bases and subject matter, you should open two separate companies (LLC) and make and S-election separately for each. If your businesses have fundamentally different business plans, different risks related to success (or failure) and different liability risks, they should be separate to protect you both and maximize the value of each business. If both of you provide the same type of consulting to the same type of customers in the same subject matter - you can open one company (LLC), make just one S-election, and have both spouses be owners. Alternatively, you can have one spouse be the owner and the other be a contractor/employee of the business. Lettuce supports both of these options.

Lettuce sets you up with a free business bank account that can be easily accessed through your Lettuce dashboard. You can view your statements, send and request invoices, transfer funds in and out, and more.

Lettuce requires that you use a Lettuce bank account to deposit invoices, run payroll, and make tax payments. In order for Lettuce to separte your income into salary and owners distribuitions, as required by the IRS, and support your tax payments, the Lettuce accounts are necessary. Once your salary and owners distribuitions have been deposited into the correct (and separate) accounts, you are free to transfer the money into your existing bank accounts. Your Lettuce bank accounts support free transfers, always.

Lettuce partners with TransPecos Banks, N.A, Member FDIC, which insures your funds up to $250,000.

Once you set up your Lettuce bank account, you will fund it with income from your business. When your clients are ready to pay your invoices, you set them up with your new routing number so your invoice payment goes directly to your Lettuce account.

We take data security and privacy extremely seriously at Lettuce. Lettuce ensures the highest security standards for your financial data, using encryption and secure protocols. Our approach to product development ensures our customers are in control of their data and that their information is safe at all times.