LLC vs S-Corp for North Miami Business Owners: The Real Numbers
Once your North Miami business clears $60K in net profit, an S-Corp election typically saves $8K–$18K per year. Here's the math.
Default LLC taxation
Single-member LLC: taxed as sole proprietor. Every dollar of profit hit with 15.3% self-employment tax on top of income tax.
S-Corp election with Form 2553
Splits your income into 'reasonable salary' (subject to SE tax via payroll) and 'distributions' (not subject to SE tax). Legal loophole IRS created decades ago.
The math on $120K net
As LLC: $120K × 15.3% = $18,360 SE tax. As S-Corp with $60K salary: $60K × 15.3% = $9,180. Savings: $9,180/yr.
When NOT to elect S-Corp
Under $50K net profit — payroll costs and extra filings eat the savings. Also skip if you need max Solo 401(k) contributions on pass-through income.
Payroll requirement
S-Corps must run real payroll (Gusto, ADP). We include payroll setup with every North Miami S-Corp election I file.