Posted by u/solo_landscaper_nc
LLC or S-corp for a service business doing $180k profit?
Answered by Ask a Shop Owner ·
CPA says elect S-corp. Buddy says stay LLC. What actually changes?
u/askashopowner Owner-operator advisor
Top answer
At $180k net profit, the S-corp election almost always wins. You pay yourself a reasonable W-2 salary (say $70k to $90k for a working owner in your trade), and the remaining profit passes through without self-employment tax. That is roughly $10k to $14k a year saved.
The cost is real: payroll service ($50/mo), a separate return (Form 1120-S, $600 to $1,200), and stricter bookkeeping. Under $60k profit it usually is not worth it. Above $100k it is almost always is.
Do not DIY the reasonable comp number. Get your CPA to document it. That is the audit exposure.
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