LLC vs S-Corp
LLC
Simple business structure with flexible taxation
Small businesses and freelancers starting out
VS
S
S-Corp
Tax election that can reduce self-employment taxes
Profitable businesses earning $40,000+ net profit
Short Answer
An LLC (Limited Liability Company) is simpler to manage with flexible taxation. An S-Corp can save on self-employment taxes if the business earns over ~$40,000/year, but requires more formalities (payroll, corporate minutes). Most small businesses start as LLCs.
Our Verdict
Start as an LLC for simplicity. Elect S-Corp tax status when your net profit consistently exceeds $40,000-$50,000/year to save on SE taxes.
Choose LLC if
Small businesses and freelancers starting out
Choose S-Corp if
Profitable businesses earning $40,000+ net profit
Track this comparison
Get notified when prices change, new specs ship, or our verdict updates.
Triggers: price change new spec verdict update
No spam. Stop anytime.
Key Differences at a Glance
🔹
Setup Complexity: LLC wins (Simple vs More Complex)
🔹
SE Tax Savings: S-Corp wins (Significant over $40K profit vs None)
🔹
Payroll Required: LLC wins (No vs Yes)
Key Facts & Figures
| Metric | LLC | S-Corp | Diff |
|---|---|---|---|
| Typical Setup Cost(USD) | $50-500 (state fee) | $500-1500 (attorney + filing) | -80% |
All figures sourced from publicly available data. Last updated May 2026.
Key Differences
LLC
Attribute
S-Corp
Simple🏆
Setup Complexity
More Complex
None
SE Tax Savings
Significant over $40K profit🏆
No🏆
Payroll Required
Related Comparisons
R
4
Roth IRA vs 401(k)
finance
B
R
Buying vs Renting a Home
finance
V
F
Vanguard vs Fidelity
finance
B
E
Bitcoin vs Ethereum
economy
N
D
Netflix vs Disney+
companies
G
M
Google vs Microsoft
companies
U
C
US Economy vs China Economy
economy
C
S
Capitalism vs Socialism
economy
A
W
Amazon vs Walmart
companies
S
R
Stock Market vs Real Estate
economy
D
C
Democracy vs Communism
economy
U
L
Uber vs Lyft
companies
Last updated: March 19, 2026Human reviewed
