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Question

LLC or S Corporation: which entity structure saves more on taxes?

Answer

An LLC is better initially for simplicity, but S Corp election becomes more tax-efficient once your net income exceeds $60,000-$80,000. S Corps help reduce self-employment taxes by splitting income between W-2 wages (taxed at 15.3%) and distributions (not subject to self-employment tax), though they require more administrative work.

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Last Updated May 20, 2026
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