S Corp vs LLC for Taxes

Choosing the right entity can dramatically change your tax bill and admin workload. Most entrepreneurs start as an LLC taxed as a sole proprietorship, then consider an S corporation once profits grow.

Key Differences

• LLC default: All profits typically subject to self-employment tax
• S corp: Reasonable owner salary subject to payroll taxes; remaining profit not
• Admin: S corps require payroll, minutes, and more strict compliance

When S Corp Can Help

• You have consistent profits (commonly $60k+)
• You’re comfortable with payroll and compliance
• You can justify a reasonable salary

When LLC Simplicity Wins

• Early-stage or fluctuating income
• Minimal overhead desired
• Single owner and straightforward operations

How FileJoy Helps

• Models SE tax vs S corp payroll scenarios
• Estimates reasonable compensation ranges
• Flags compliance tasks so you stay penalty-free

The right choice depends on profits, growth, and how much admin you’re willing to take on for savings.