By default, single-member LLCs are taxed like sole proprietorships, but can elect S-Corp treatment.
A single-member LLC is a 'disregarded entity' for tax purposes—meaning you report business income on Schedule C just like a sole proprietor. However, LLCs can elect to be taxed as S-Corps, which can provide significant tax savings for profitable businesses by reducing self-employment tax.
Not by itself. A single-member LLC is taxed the same as a sole proprietorship. Tax savings come from S-Corp election, which is available to any LLC.
Generally when net profit exceeds $80,000-100,000. S-Corp lets you pay yourself a reasonable salary and take remaining profits as distributions not subject to SE tax.
AlphaTax helps self-employed professionals maximize tax savings with AI-powered expense tracking.
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