Posted by u/sole_prop_confused
LLC or S-corp, which and when?
Answered by Ask a Shop Owner ·
Been sole prop for a year. Making about $70k net. Time to change?
u/askashopowner Owner-operator advisor
Top answer
Form an LLC now for liability protection, regardless of tax structure. Takes 30 minutes and $50 to $300 depending on state.
Elect S-corp tax treatment when your net profit passes about $50k. That is roughly when the self-employment tax savings ($4k+/yr) exceed the extra cost of payroll and a slightly more complex tax return.
At $70k net, you are past that line. Do it this year. Talk to your CPA, not TurboTax, before you file the S-election. Wrong timing on the election costs you the year.
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