What is the difference between an LLC and an S-Corp?

An LLC is a legal entity structure. An S-Corp is a tax election. You can have an LLC that is taxed as an S-Corp. The S-Corp election changes how your profits are taxed — you pay yourself a 'reasonable salary' (subject to payroll taxes) and take the remainder as a distribution (not subject to SE tax).

How do I elect S-Corp status for my LLC?

File IRS Form 2553 (Election by a Small Business Corporation). For the election to take effect in the current tax year, you must file within 75 days of forming your LLC, or by March 15 of the tax year you want it to apply. Late elections are possible but require IRS approval.

Do I need to run payroll if I elect S-Corp status?

Yes. The IRS requires S-Corp owner-employees to pay themselves a 'reasonable salary' through payroll. This is non-negotiable. You'll need payroll software (Gusto, Rippling) and a payroll tax account. This is the main administrative burden of the S-Corp election.

Can a single-member LLC elect S-Corp status?

Yes. A single-member LLC can elect S-Corp status by filing Form 2553. The IRS will treat you as a one-person S-Corp. You must pay yourself a reasonable salary and run payroll, even as the only employee.

LLC vs S-Corp Tax Savings 2026: What Solopreneurs Need to Know

Q: At what income level does an S-Corp election make sense?

Most CPAs recommend considering the S-Corp election when your net self-employment income consistently exceeds $60,000–$80,000/year. Below that, the cost of required payroll administration ($1,500–$3,000/year) typically exceeds the SE tax savings.

# LLC vs S-Corp: Which Structure Actually Saves You More in Taxes? An LLC taxed as an S-Corp saves money on self-employment taxes once your net profit consistently exceeds $60,000–$80,000/year. Below that threshold, the administrative costs (payroll, bookkeeping, tax prep) typically exceed the savings. The S-Corp election is not a universal win — it's a math problem with a specific break-even point. The S-Corp election is one of the most talked-about tax strategies for solopreneurs — but it's not always the right move. Here's the math, the thresholds, and the hidden costs most people ignore. Read the full article at https://solofilinglab.com/articles/llc-vs-s-corp-tax-savings-solopreneur