04/16/2026
🏢 IS AN S-CORPORATION THE RIGHT MOVE FOR YOUR BUSINESS?
If your business is profitable and you’re paying significant self-employment taxes, an S-Corp election could be one of the smartest financial decisions you make.
Here’s how it works:
As a sole proprietor or single-member LLC, you pay 15.3% self-employment tax on ALL net business income.
With an S-Corp:
✅ You pay yourself a reasonable salary (subject to payroll taxes)
✅ Remaining profits are taken as distributions (NOT subject to self-employment tax)
✅ This can save thousands of dollars per year in SE taxes!
Example:
🔹 $120,000 net income as a sole proprietor: $18,360 in SE taxes
🔹 $120,000 as S-Corp owner with $60K salary: ~$9,180 in SE taxes
🔹 Potential savings: ~$9,000/year!
IMPORTANT: The S-Corp election has costs (payroll requirements, additional filings), so it makes sense primarily for businesses netting $50K+ annually.
Combined with the now-permanent 20% QBI deduction, S-Corp owners can maximize their tax savings significantly.
Are you still operating as a sole proprietor or LLC without an S-Corp election? Let’s talk about whether it makes sense for your business.
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