Rachel Harbor, CPA
Founder & Managing Partner · April 28, 2026
The S-Corp vs LLC question comes up in nearly every new business client meeting. My answer is always the same: it depends on your net profit, and I need to run the numbers before I can tell you. Here's the framework we use.
A single-member LLC (SMLLC) with no S-Corp election is a 'disregarded entity' for federal tax purposes. All net profit passes directly to your Schedule C and is subject to self-employment tax — 15.3% on the first $168,600 of net earnings (2025), and 2.9% on everything above that. On $100,000 of profit, that's approximately $14,130 in SE tax before you even get to income tax.
An S-Corp election changes the math. As an S-Corp shareholder-employee, you must pay yourself a 'reasonable salary' — let's say $60,000 for a consultant role in Tampa. That $60,000 is subject to payroll tax (FICA). The remaining $40,000 flows as a distribution, which is not subject to SE tax. On that $40,000 distribution, you've avoided approximately $5,652 in FICA taxes (employee + employer share). Annualized, that's real money.
But the S-Corp isn't free. You'll need payroll processing (Gusto or ADP runs $50–$100/month), quarterly payroll tax filings (Form 941), and an annual Form 1120-S filing. With our bookkeeping and tax preparation bundled, the incremental cost to maintain S-Corp status is typically $1,200–$2,400/year above the LLC alternative. The breakeven is usually around $45,000–$55,000 of net profit — below that, the administrative cost erodes the SE tax savings.
In Florida specifically, there's an additional wrinkle: Florida imposes no personal income tax, which reduces (but doesn't eliminate) the income tax differential between salary and distributions. It does not change the federal SE tax analysis.
Our recommendation: if your Schedule C or SMLLC net profit has been consistently above $60,000 for two years and is expected to continue, schedule a call. We'll run your specific numbers, account for your industry's reasonable compensation benchmarks, and make a recommendation. The S-Corp election can be made mid-year in some circumstances, and we've helped several clients make it retroactively for the current tax year.
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