LLC vs S-Corporation - Which One Can Save You More On Your Taxes?

“The hardest thing in the world to understand is the income tax.” – Albert Einstein

Business entity selections are not only important for start-ups, but also for more mature businesses. The more complex a business gets, the more flexibility may be needed in order to maximize tax savings. 

Most small businesses in the U.S. are limited liability companies (LLCs). On the other hand, there are some business owners who elect to be taxed as an S-Corporation so they can reduce their self-employment tax. So which business entity is right for your business?

Here is a comparison of some of the basic tax differences to keep in mind when switching from an LLC to an S-Corporation:

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For more information on self-employment tax see LLC Taxation for Small Business