As your business grows, so do your decisions — and choosing the right legal structure is one of the biggest. If you’re operating as an LLC and starting to wonder whether it’s time to switch to an S-Corp, you’re not alone. Many small business owners hit this crossroads and aren’t sure which path to take.

At C Squared Accounting, we help entrepreneurs make informed financial decisions, and entity structure is a critical one. In this blog, we’ll break down the differences between an LLC and an S-Corp, and how each one impacts your taxes, compliance, and business goals.

LLC Basics: Simplicity and Flexibility

A Limited Liability Company (LLC) is a popular starting point for small business owners. It’s easy to set up, flexible in how it’s taxed, and limits personal liability.

Benefits of an LLC:

  • Simpler tax filing (especially for single-member LLCs)

  • Minimal paperwork and maintenance

  • Pass-through taxation (you pay taxes on profits personally)

But as profits grow, so does the tax burden — and that’s where an S-Corp can step in.

S-Corp Advantages: Potential Tax Savings

An S Corporation isn’t a business entity type — it’s a tax election you make with the IRS. You can elect to be taxed as an S-Corp if you meet certain requirements (and your LLC can even make the switch).

Benefits of an S-Corp:

  • Ability to pay yourself a “reasonable salary” and take additional profits as distributions, which aren’t subject to self-employment tax

  • Potential for lower overall tax liability

  • Increased credibility with investors or lenders

What to Consider Before Switching

Making the leap to S-Corp status isn’t always the right move — it depends on your income, industry, and how you plan to grow.

Ask yourself:

  • Are you consistently profiting over $40,000 per year?

  • Do you want to reduce your self-employment tax liability?

  • Are you ready to take on payroll and additional reporting requirements?

  • Do you have (or need) help with bookkeeping and compliance?

If you answered “yes” to most of these, an S-Corp might be worth exploring.

Let’s Weigh the Pros and Cons Together

Every business is different — and your structure should reflect your goals, income, and comfort level with compliance. At C Squared Accounting, we specialize in helping small businesses make strategic decisions that align with growth and peace of mind.

Considering an S-Corp election? Let’s talk before you make the move.
 📞 (631) 452-1423
 🌐 csquaredacct.com