LLC vs. S-Corp: How to Lower Your Self-Employment Taxes by Katie St Ores CFP

Disclosure: This description contains affiliate links to products and services we recommend. If you use these links, we may earn a commission at no extra cost to you, which helps support this channel. Two business owners can earn the same $100,000 profit, yet one may pay thousands more in taxes due to their IRS tax classification. In this video, Katie St Ores, CFP® and Enrolled Agent, explains the critical differences between a standard LLC and an S-Corp election.We break down how the S-Corp election can reduce your self-employment tax burden, the IRS requirement for "reasonable salary," and the administrative costs you must consider before making the switch.Key Topics Covered:The legal difference between an LLC and an S-Corp classification. How "disregarded entities" are taxed by default. Understanding the 15.3% self-employment tax. The strategy of splitting income between W-2 salary and owner distributions. When your net profit justifies the cost of the election. Resources & Affiliate Links: Bizee (LLC Formation): https://go.saintores.com/bizee e-file.com (Best Overall Tax Software): https://go.saintores.com/e-file TurboTax (Best for Small Business): https://go.saintores.com/turbotax FreeTaxUSA (Free Federal Filing): https://go.saintores.com/freetaxusa Adobe (Creative Tools): https://go.saintores.com/adobe Subscribe for more tax strategy: https://go.saintores.com/Sub Chapters: 0:00 - The $100,000 Tax Difference 0:46 - LLC vs. S-Corp: Legal vs. Tax Status 1:53 - How a Standard LLC is Taxed 2:20 - The Burden of Self-Employment Tax 3:04 - How the S-Corp Election Works 3:47 - Saving Money with Owner Distributions 4:07 - IRS Reasonable Salary Requirements 5:08 - Administrative Costs and Payroll 6:03 - Form 1120S and Complexity 7:00 - When to Switch: The Profit Threshold #LLC #SCorp #TaxStrategy #SmallBusiness #SelfEmploymentTax #SoleProprietorship #Tax #Entrepreneur #BusinessStructure #katie-st-ores Financial Disclaimer: Katie St Ores is a Certified Financial Planner™ (CFP®) and an Enrolled Agent (EA) licensed by the US Department of the Treasury. However, the content in this video and description is provided for general educational and informational purposes only and is not intended as a substitute for professional advice. This information should not be construed as personalized tax, legal, or financial advice. Every business and individual financial situation is unique. Always consult with a qualified professional regarding your specific tax or financial circumstances before making any decisions or taking action.