Lettuce Level Up: Is an S Corp Your Next Growth Move?

Being self-employed costs you an extra 15.3% in taxes. An S-corp cuts that bill. Lettuce and Formations explain exactly how the math works and whether you're ready to make the move. Gabrielle Tanaglia from Lettuce and Marcus Edgget, enrolled agent at Formations, walk through every business structure available to solopreneurs and explain why an S-corp is often the most powerful tax move most people have never been told about. The core problem is self-employment tax. As a sole proprietor or LLC, you pay 15.3 percent on your net income because the government sees you as both employee and employer. A W2 worker splits that with their employer at 7.65 percent each. An S-corp solves this by splitting your income into two buckets, a salary that is subject to SE tax and an owner's distribution that is not. On $175,000 in revenue with a $70,000 salary, you pay SE tax only on the salary, saving over $14,000 before any other deductions. At $100,000 in revenue, the savings are roughly $10,000. Gabrielle ran her business as a sole proprietor for years and calls herself a chronic overpayer of taxes. The reason most solopreneurs are in the same position is simple. The IRS does not have a marketing department. It has no interest in telling you how to use its own tax code to pay less. Marcus explains what it takes to run an S-corp. You need an LLC as the base entity, Form 2553 filed with the IRS, a payroll system, and a separate business tax return on Form 1120S. The practical threshold is around $60,000 in net profit, where the cost of running the structure and the savings start to break even. Lettuce sets the salary split at 40 percent salary to 60 percent distribution by default, calibrated to market rate data by role and state to stay audit-defensible. The Q&A covers owner's distributions (distributions alone do not create a taxable event; profit is what gets taxed), timing (you can elect S-corp status at any point in the year and backdate if you already have an LLC), and retirement planning (Solo 401k is almost always better than a SEP IRA for solopreneurs). Lettuce handles the S-corp setup, payroll, bookkeeping, and tax filings so you can focus on your business. Use code SOLOVIP at https://lettuce.co for a free month plus a free 2024 tax return. TIMESTAMPS: 0:00 - Welcome and Session Format (Kim, Lettuce) 1:18 - Introducing Gabrielle Tanaglia (Lettuce) and Marcus Edgget (Formations) 1:59 - Gabrielle Opens: How She Became a Chronic Overpayer of Taxes 4:10 - The Four Business Structures: Sole Prop, LLC, S-Corp, C-Corp 4:17 - Sole Proprietor: No Liability Protection, Full Self-Employment Tax 4:47 - LLC: Liability Protection, But No Tax Advantages Over Sole Prop 5:51 - S-Corp: A Federal Tax Election That Reduces Self-Employment Tax 6:43 - C-Corp and Professional Corporations (PLLC) for Licensed Professions 7:26 - The 15.3% Self-Employment Tax: Why You're Paying Both Sides 8:27 - The S-Corp Math: $175K Revenue, $70K Salary, $14,000+ Saved 9:44 - What Does It Actually Take to Set Up and Run an S-Corp? 10:21 - Form 2553: How to Tell the IRS You Want S-Corp Status 11:14 - Payroll, Form 1120S, and Ongoing S-Corp Compliance 11:47 - Gabrielle's Story: "You Are Getting Killed on Taxes" 14:17 - Why Haven't More Solopreneurs Heard About S-Corps? 14:56 - "The IRS Does Not Have a Marketing Department" 17:26 - When Is the Right Time to Set Up an S-Corp? 18:01 - The $60,000 Net Profit Threshold 18:49 - Lettuce's Tax Savings Calculator Tool 20:00 - S-Corp as a Growth Strategy: Treat Your Business Like a Business 22:22 - "My Kids Asked When I'd Get a Real Job — Then I Became a CEO" 24:06 - How Lettuce Automates S-Corp Setup and Ongoing Compliance 25:25 - Lettuce vs. Formations: Same Playbook, Different Service Model 26:15 - Q&A: How Is Owner's Distribution Taxed? 27:27 - Q&A: What's the Right Salary vs. Distribution Ratio? 28:37 - Lettuce's Default: 40% Salary, 60% Distribution 30:21 - Q&A: No SE Tax on Distributions in an S-Corp, Confirmed 31:35 - Q&A: Can You Start an S-Corp If It's Not January? 32:08 - Retroactive S Election: If You Have an LLC, You May Be Able to Backdate 33:08 - March 15 Soft Deadline for Backdating to Prior Year (Formations Handles This) 34:39 - Q&A: Retirement Planning and Owner's Distribution 36:28 - Marcus's Free Tip: Solo 401k vs. SEP IRA 37:04 - Closing + Code SOLOVIP: Free Month + Free 2024 Tax Return 38:14 - Lettuce Solo Challenge CONNECT WITH US: Website: https://lettuce.co Instagram: @lettucehq LinkedIn:   / lettuceco   #SCorpElection #LLCvsSCorp #SolopreneurTaxes #LettuceCo #SelfEmploymentTax #FreelancerTaxes #SmallBusinessTaxes #SolopreneurFinance #TaxSavings #SCorpForSolopreneurs #BusinessStructure #Solo401k #OwnerDistribution #SolopreneurGrowth #TaxStrategy