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LLC vs S-Corp: What’s the Difference?

ByChristophe Reading Time: 3 minutes

Intro

LLC vs. S-Corp is one of the most misunderstood questions for new business owners—and getting it wrong can cost you.

At hustlebeginner.com, we’ve seen thousands of early-stage founders wrestle with this choice. The good news? It’s simpler than you think.

Why It Matters

Choosing the wrong structure early can result in overpaying taxes, missing deductions, or facing costly compliance errors.

hustlebeginner.com was built to help users like you make smarter decisions with confidence. Let’s break this down in plain English.

LLC vs S-Corp: What They Really Are

  • An LLC (Limited Liability Company) is a flexible legal structure that protects personal assets and keeps things simple.
  • An S-Corp (Subchapter S Corporation) is a tax election you apply to your LLC or corporation that changes how you’re taxed—not what you are.

When Should I Choose an LLC?\

Business Man approve sign on business document.
Business Man signing a business document.
  • You’re just starting
  • You expect to earn less than $60K per year
  • You want minimal paperwork and easy tax filing

LLC profits flow directly to your personal tax return. You’ll pay self-employment tax (15.3%) and income tax.

When Does an S-Corp Make Sense?

  • You’re earning $75K+ net profit
  • You can afford to pay yourself a salary
  • You’re ready for bookkeeping + payroll requirements

S-Corp lets you split income:

  • Salary (taxed like a W-2 job)
  • Profit distributions (avoid self-employment tax)

What If You Start as an LLC and Change Later?

Totally normal. Most owners begin as an LLC and elect S-Corp status later via IRS Form 2553—no need to form a new company.

Real-World Example

  • LLC earning $45K = ~$7,000 in self-employment tax
  • S-Corp earning $100K = Pay yourself $40K salary, save ~$7K+ in taxes

Which One Costs More?

  • LLC is cheaper to manage
  • S-Corp requires:
    • Payroll service
    • CPA for annual 1120S tax return
    • Quarterly filings
      Still, the tax savings often outweigh the costs by thousands.

Pro Tips

  • Start LLC now; elect S-Corp later once revenue climbs
  • Don’t forget to track income and expenses—tools like Relay + Hurdlr make it easy
  • File Form 2553 by March 15 to apply S-Corp status for the current year

Next Steps CTA

Once you cross $75K–$100K in business profits, switching to S-Corp is often a smart move.
Read more in our in-depth guide at hustlebeginner.com.

FAQ Section

What’s the deadline to switch to S-Corp for this tax year?

You must file IRS Form 2553 within 75 days of the beginning of the tax year, typically by March 15.

Does an S-Corp protect me legally more than an LLC?

No. Liability protection stays the same—S-Corp only changes tax treatment.

Can I switch back to LLC tax status later?

Yes, but you’ll need IRS approval. It’s not as simple as switching to S-Corp.

Do I need to form a new business to elect S-Corp?

No. You keep your LLC and elect to be taxed as an S-Corp.

Can I file S-Corp taxes myself?

You can, but it’s not recommended—hire a CPA for compliance and accuracy.

Written by Gene of the hustlebeginner.com Editorial Team. Learn how we write and test all our content for accuracy.

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