S-Corp vs. LLC: Which Tax Structure is Best for Women Entrepreneurs?

Summary of What This Blog Covers:

• Understand the real financial impact of choosing between an LLC and an S-Corp — This blog explains how your business structure affects your taxes, take-home pay, and long-term financial flexibility and how switching to an S-Corp could help you legally reduce your self-employment tax burden.
  
  
• Learn how to identify the right time to make the switch from LLC to S-Corp — Whether your profits are climbing past $80,000 or you’re planning to scale, this post breaks down when it makes sense to stay put and when it’s time to restructure with real examples from women business owners.
  
  
• Explore what it takes to run an S-Corp—and why it’s worth the added structure — From setting up payroll to filing Form 1120-S, you’ll learn the essential compliance steps and how working with a certified public accountant near you can simplify the transition and keep you compliant.
  
  
• Discover how strategic tax planning goes beyond structure — This blog emphasizes the importance of year-round planning with a proactive CPA who can help you manage expenses, plan quarterly payments, handle 1099s and W9s, and align your business with long-term wealth-building strategies.

You’ve done the hard part. You launched your business with grit and vision, figured out how to attract clients, deliver results, and make a real impact. You’ve learned the lessons, pushed past the doubts, and proven to yourself and others that yes, this works.

Now you’re bringing in consistent revenue, sometimes more than you imagined when you first started. But with that growth comes a new set of questions especially around taxes.

One of the most common ones we hear is:
 “Should I stick with my LLC or switch to an S-Corp?”

It’s a good question. A strategic one. And the answer could mean saving thousands of dollars every year, improving how you pay yourself, and protecting what you’ve worked so hard to build.

At Insogna CPA, a woman-forward CPA firm in Austin, Texas, we’ve helped hundreds of business owners navigate this exact decision. We’ll break it all down in plain language so you can choose what’s best for you with confidence, clarity, and a clear understanding of the benefits and trade-offs.

Why Business Entity Structure Matters More Than You Think

Your business structure determines more than just how you register with the state. It affects:

• How you’re taxed
  
  
• How much you pay in self-employment tax
  
  
• How you pay yourself (and how often)
  
  
• Your compliance responsibilities
  
  
• Your personal liability in legal or financial issues
  
  
• Your future eligibility for funding or sale
  
  

Choosing the right structure doesn’t just save money. It sets you up for long-term success and flexibility. The good news? If you’re structured as an LLC now, you don’t need to start from scratch to make a change. You can elect S-Corp taxation while keeping your legal structure intact.

Let’s walk through both options.

What Is an LLC and Why So Many Women Start Here

An LLC (Limited Liability Company) is one of the most popular legal structures for small businesses and solopreneurs. It’s simple, flexible, and offers personal liability protection—meaning your home, savings, and personal assets are protected if your business faces legal or financial trouble.

From a tax standpoint, a single-member LLC is considered a pass-through entity. That means:

• The business doesn’t pay corporate tax.
  
  
• All profit is reported on your personal income tax return.
  
  
• You pay self-employment tax (15.3%) on 100% of your net profit.
  
  

Why an LLC Works Well:

• Easy to form and maintain
  
  
• Offers asset protection without corporate complexity
  
  
• Fits businesses still ramping up or under $80,000 in annual profit
  
  
• Doesn’t require payroll or additional tax filings beyond Schedule C
  
  

But Here’s the Trade-Off:

• You pay self-employment tax on every dollar of profit.
  
  
• As your income increases, so does your tax bill.
  
  
• There’s limited flexibility in how you compensate yourself.
  
  
• You might miss out on advanced tax planning opportunities available through S-Corp structuring.
  
  

If you’re starting to feel like you’re giving away too much of your hard-earned income to the IRS, it may be time to look at a smarter option.

What Is an S-Corp and Why Growing Businesses Love It

An S-Corp (Subchapter S Corporation) is a tax election, not a new business structure. In other words, you can elect to be taxed as an S-Corp even if your business is still legally an LLC.

What changes?
 Your profit is now split into two parts:

1. A reasonable salary, on which you pay payroll taxes
   
   
2. Distributions, which are not subject to self-employment tax
   
   

This structure lets you reduce the amount of income subject to the 15.3% self-employment tax, leading to significant savings.

Why Women Entrepreneurs Choose S-Corp Status:

• You only pay payroll taxes on your salary, not your full profit
  
  
• Distributions are not subject to self-employment tax
  
  
• It can save you $8,000–$15,000+ per year if you’re earning $80,000+ in profit
  
  
• You still retain LLC liability protection
  
  
• It’s a scalable structure that grows with you
  
  

But this isn’t just about the numbers. It’s about building a system that supports your lifestyle and protects your time, your finances, and your future.

Comparing the Two: A Side-by-Side Look

Real-Life Examples: How Much Can You Really Save?

Emma, the Consultant

Emma owns a boutique consulting firm in Austin. She earns $120,000 in annual net profit as a single-member LLC.

As an LLC:

• Pays 15.3% self-employment tax on full $120K = $18,360
  
  
• Pays additional income tax on that total
  
  

As an S-Corp:

• Pays herself $60,000 salary (subject to payroll tax)
  
  
• Takes $60,000 in distributions (not subject to self-employment tax)
  
  
• Total payroll taxes: ~$9,180
  
  
• Tax savings: approx. $9,000 per year
  
  

Sophia, the E-Commerce Business Owner

Sophia runs an online boutique generating $250,000 in profit annually.

As an LLC:

• Pays over $38,000 in self-employment taxes alone
  
  

As an S-Corp:

• Pays herself a $100,000 salary
  
  
• Takes $150,000 in distributions
  
  
• Total tax savings: often $15,000+ per year
  
  

These are not edge cases. These are everyday women just like you who made a smart shift that changed the way they think about taxes.

What You’ll Need to Run an S-Corp Successfully

S-Corp status does come with a few extra requirements. But they’re manageable and they’re worth it.

Here’s what changes:

• You need to run payroll (we can help set this up)
  
  
• You’ll file a separate business tax return (Form 1120-S)
  
  
• You’ll need to keep clear records of salary vs. distributions
  
  
• You’ll have quarterly and annual payroll tax filings
  
  
• You’ll want professional support from a certified public accountant near you who knows your business well
  
  

Think of it like this: you’re moving from doing your own oil changes to working with a trusted mechanic. Yes, it’s an investment but it protects your engine and saves you more over time.

When to Stick with an LLC

There’s no shame in staying where you are if it still works.

You may want to hold off on the S-Corp if:

• Your business is earning less than $80,000 in net profit
  
  
• Your income is inconsistent or highly seasonal
  
  
• You’re not ready to run payroll or manage additional filings
  
  

That said, working with a tax consultant near you or a tax advisor in Austin can help you make the most of your LLC with:

• Proper expense tracking
  
  
• Clean bookkeeping
  
  
• Estimated quarterly tax planning
  
  
• Retirement plan contributions to reduce taxable income
  
  

Beyond Structure: Building a Proactive Tax Strategy

Electing the right entity is only one part of a great tax strategy. At Insogna CPA, we help our clients:

• Set up and manage QuickBooks Self-Employed
  
  
• Handle contractor payments, 1099 NEC filings, and W9 form collection
  
  
• Maximize deductions for legitimate business expenses
  
  
• Plan for multi-state income and FBAR filing
  
  
• Make quarterly tax payments accurately and on time
  
  
• Reduce tax liability through retirement contributions, charitable giving, and more
  
  

We offer full-service support from a team of certified CPAs, enrolled agents, and taxation accountants so you’re never left guessing.

Let’s Find the Right Fit for You

If your business is growing, your tax structure should grow with it.

Whether you’re still in your LLC’s sweet spot or ready to transition to an S-Corp, we’ll help you evaluate your options, run real projections, and create a system that keeps more money in your business and more peace in your life.

Because at this level, taxes aren’t just a cost. They’re a strategy.

Ready to Make the Smart Switch?

Schedule a tax strategy session with Insogna CPA, a trusted Austin, Texas CPA firm dedicated to serving women entrepreneurs with clarity, confidence, and expert care.

We’ll help you:

• Review your current structure
  
  
• Run the numbers on S-Corp savings
  
  
• Set up payroll, bookkeeping, and compliance systems
  
  
• Build a proactive plan that supports your business goals
  
  

You’ve worked hard for your success. Let’s make sure you’re keeping more of what you’ve earned.

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