04/25/2026
If you're running your business as a plain LLC and you're clearing six figures, you are probably leaving thousands of dollars in your accountant's pocket instead of yours.
Here's what most business owners don't know.
An LLC by itself doesn't save you taxes. It protects you legally — and that matters — but by default the IRS taxes you on every dollar of profit. That includes self-employment tax, which is 15.3%. On $200,000 in profit, that's over $30,000 just in SE tax alone.
Now here's where the S-Corp election changes everything.
When you elect S-Corp status, you split your income into two buckets. You pay yourself a reasonable salary — let's say $80,000 — and the remaining $120,000 flows to you as a distribution. You only pay self-employment tax on the salary. The distribution? No SE tax.
On that same $200,000, you could save $15,000 to $20,000 a year — just from that one move.
But here's the catch nobody talks about: S-Corp isn't always the right answer. If your profit is under $50,000, the administrative costs eat up the savings. And if your business is growing fast or you're planning to bring on investors, a C-Corp structure might actually serve you better long-term.
This is why cookie-cutter advice is dangerous. The right structure depends on your revenue, your payroll, your exit plan, and how you're reinvesting in the business.
I'm Jarret Willey. I've spent 25 years helping business owners structure their entities to keep more of what they earn — legally, strategically, and permanently.
If you want to know which structure is right for your situation, book a free strategy session at jwtaxandconsulting.com. Link is right below.
Don't let the wrong entity cost you another year of unnecessary taxes.
