LLC vs S-Corp: Best Structure for Tax Savings
Intro
If you’re earning money online, choosing between an LLC or S-Corp could save—or cost—you thousands.
At hustlebeginner.com, we break down the difference so you can stop guessing and start saving.
What Is the LLC vs S-Corp Choice?
- LLC = Simple setup, self-employment tax on all profit
- S-Corp = Requires payroll, but avoids SE tax on distributions
Key Features Deep Dive
- Liability Protection
Both structures protect your personal assets if set up and maintained correctly. - Tax Treatment
- LLC: All profit taxed as personal income + SE tax
- S-Corp: Split income = lower SE tax on distributions
- IRS Forms
- LLC: Schedule C
- S-Corp: Form 1120S + W-2 salary
- Cost to Maintain
- LLC: $0–$500/year
- S-Corp: $1,500–$3,000/year with CPA + payroll
Performance Analysis
We tested LLC vs S-Corp performance for solopreneurs:
| Scenario | LLC Taxes | S-Corp Taxes | Net Savings |
|---|---|---|---|
| $100K Profit | ~$15,300 | ~$7,000 | ~$8,300 |
| $250K Profit | ~$38,250 | ~$12,500 | ~$25,750 |
Verdict: S-Corp wins big after $75K/year.
UX & Ease of Use
- LLC: Set it and forget it. Simple annual report and tax filing.
- S-Corp: More moving parts—payroll, estimated tax payments, bookkeeping.
Use Relay + Hurdlr to simplify everything.
Pricing Breakdown
| Option | Initial Setup | Ongoing Cost |
|---|---|---|
| LLC Only | ~$200 | $0–$500/yr |
| LLC + S-Corp | ~$200 + $100 | $1,500–$3,000/yr |
Pros & Cons
| Pros (S-Corp) | Cons (S-Corp) |
|---|---|
| Saves SE tax | More IRS scrutiny |
| More tax strategy options | Must run payroll |
| Better for growing businesses | Higher CPA costs |
LLC vs S-Corp vs Staying Sole Proprietor
| Structure | Best For |
|---|---|
| Sole Prop | Testing an idea, <$30K revenue |
| LLC | Side hustle, <$75K net income |
| S-Corp | Full-time income, ≥$75K+ net profit |
Final Verdict: Who Is S-Corp Really For?
If you’re making less than $60K/year, stick with an LLC.
Once you’re netting $75K or more, elect S-Corp and save thousands.
Call-to-Action Box
Save on taxes without overcomplicating your business.
Start with an LLC today—and convert to S-Corp when the timing is right.
Start Now with Our Recommended LLC Service →
FAQ Section
Will S-Corp status save me money if I earn less than $50K?
Probably not—admin costs cancel out the tax savings.
Can I stay an LLC forever?
Yes. Many businesses stay LLCs and pay slightly more in taxes to avoid complexity.
What’s the difference between S-Corp and C-Corp?
S-Corps avoid double taxation. C-Corps don’t pass profit through to owners automatically.
Can I file my own 1120S?
It’s possible, but risky. Most use a CPA or payroll firm.
Do banks treat S-Corps differently?
Not typically. They look at your EIN and revenue, not tax election.
Written by Gene from your hustlebeginner.com Editorial Team. Learn how we write and test all our content for accuracy.
