From LLC to S-Corp: Stop Overpaying Taxes & Start Moving Like a Real Business

Let’s get straight to it!

If your LLC is making money and you’re still paying self-employment tax on every single dollar, you’re probably giving the government more than it deserves. An S-Corp election isn’t a flex—it’s a strategy. And when done right, it keeps more money in your pocket.

This isn’t TikTok tax advice. This is grown-business talk.

First Things First: What an S-Corp Actually Is

An S-Corp is not a new business entity.

It’s a tax election made with the Internal Revenue Service.

You can:

• Stay an LLC at the state level

• Elect to be taxed as an S-Corporation federally

Same business. Different tax treatment. Very different results.

Why LLC Owners Make the Switch (When They’re Ready)

1. Because Self-Employment Tax Is a Silent Killer

LLC owners pay 15.3% self-employment tax on all net profit.

S-Corp owners don’t.

With an S-Corp:

• You pay yourself a reasonable salary (payroll taxes apply)

• Remaining profit comes out as distributions (no SE tax)

Quick example (real numbers):

LLC nets $75,000 → SE tax on $75,000

S-Corp pays $45,000 salary → payroll tax on $45,000

Remaining $30,000 → no self-employment tax

That’s not a loophole. That’s the tax code working as designed.

2. Your Business Is No Longer “Side-Hustle Energy”

If your LLC is:

• Netting $40K–$50K+ consistently

• Not just “trying things out”

• Something you actually plan to grow

You’ve outgrown the starter structure.

An S-Corp introduces discipline:

• Payroll

• Clean books

• Clear separation between owner and business

That’s how lenders, partners, and the IRS expect real businesses to operate.

3. You Want Strategy—Not Surprises

LLCs are simple, but simple gets expensive when income increases.

S-Corps allow:

• Better tax forecasting

• Smarter cash flow planning

• Intentional owner compensation

Translation: fewer “why do I owe so much?” moments.

When an S-Corp Is Not the Move (Yet)

Let’s be honest—this isn’t for everyone.

You should wait if:

• Your profit is under ~$40K

• Income is inconsistent or unpredictable

• You’re not ready for payroll

• Your books are a mess

An S-Corp done too early costs money.

An S-Corp done wrong costs more.

What Changes After You Elect S-Corp Status

This is where people get tripped up.

✔ Payroll Is Mandatory

• You must pay yourself a reasonable salary. No salary = audit bait.

✔ Owner Pay Is Structured

• Salary ≠ distributions

• Random transfers stop immediately

✔ More Compliance

• S-Corp tax return (Form 1120-S)

• K-1 issued to yourself

• Payroll filings (federal + state)

This is why S-Corps are not DIY decisions.

Common S-Corp Mistakes (Don’t Be That Client)

• Paying yourself nothing

• Paying yourself too little

• Mixing personal & business funds

• Electing S-Corp status because “someone on TikTok said so”

• Making the election without running the numbers first

If you’re going to do it—do it clean.

Timing Matters More Than People Think

The election can:

• Start at the beginning of a tax year

• Or be filed late (if you qualify)

The right timing can save thousands.

The wrong timing can cause penalties, back filings, and unnecessary stress.

This is why S-Corp elections should always be part of a tax plan, not a panic move.

Bottom Line: An S-Corp Is a Tool—Not a Trophy

This isn’t about sounding fancy.

It’s about keeping more of what you earn.

If your LLC is profitable and taxes are starting to feel disrespectful, it’s time to look at structure—not hustle harder.

Ready to See If an S-Corp Makes Sense for You?

A proper S-Corp analysis answers:

• Should you elect now—or wait?

• How much could you actually save?

• What’s a defensible salary?

• How to transition without IRS problems

Because making money is one thing.

Keeping it is the real power move.