Would $53k be a reasonable amount of salary for $100k net profit? Is there a good rule of thumb on this?
You shouldn't use a rule of thumb for breaking down the profits into salary and distributive share. But you might find this summary of (sort of) the average S corporation salaries by industry useful:
Average S corporation salary data based on IRS 1120S return
This blog post I did earlier this summer might help, too:
S corporation reasonable compensation
The HSA contribution is currently taken out of the W2 income. Will having it paid by the S-corp generate more tax savings?
I think so. Partly (or maybe wholely) because in an S corporation that HSA can probably be counted as W=2 Box 1 wages... and your W-2 Box 1 wages amount is what determines your employer pension match.
I can run payroll using 3rd party software. It'll cost roughly ~$500/yr for 1 employee.
That sounds right.
Can I still form s-corp for 2016? Or will it be easier to start next year?
For 2016? No, sorry. Several factors make this either impractical or impossible. One big issue: You needed an eligible entity (so probably an LLC) in existence on 1/1/2016 in order to have something to make the S election "for" on 1/1/2016. You're also now late filing that 1120S return (which means you're looking at at least $1200 of penalties). Further, you needed to have payroll back in 2016... needed to make payroll deposits and file returns, etc... you didn't so more penalties there.
BTW, if you have an eligible entity, you could still make the election for 2017 with a 1/1/2017 effective date... you'd just need to make sure you could get to a reasonable compensation amount by end of 2017.
Can I ask why the HRA is not a good set up? Health insurance is one of the major spending in our household and if we can legally expense it as business deduction, that would be great. Do you have any suggestions?
You can technically probably do an HRA if you're a one employee S corporation. But HRAs to me are often sort of a mess.
BTW, if you're thinking about an HRA simply to deduct the insurance, you should just have an S corp pay the health insurance.
Health insurance for an s corp shareholder-employee, if handled right, saves both income taxes and payroll taxes, bumps up your compensation, and means a higher "earnings" amount on which the employer pension match is calculated.
E.g., if you set your base to $48K but have $12K of insurance, box 1 on a W-2 from the S corp should show $60k. The employer 25% pension match in this case equals $15K. That puts your compensation to $75K which is probably high enough in many situations. Especially if your tax returns are artfully prepared.
Note that in the above example, you're paying the FICA and SS taxes on the $48K and not on the $100K