When to Switch From an LLC to an S Corp

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Knowing how your business structure affects your taxes can be the key to keeping more of what you earn. This video dives into the question every entrepreneur eventually faces — when to switch from an LLC to an S Corp. It’s an insightful look at how smart tax planning, not just hard work, shapes long-term financial success. With clear explanations and real examples, it helps business owners see how their structure directly impacts what they owe and what they keep.

In this video, tax expert Karlton Dennis explains the critical differences between operating as an LLC and electing S Corp status. He breaks down the financial implications of each, using relatable scenarios to illustrate how these choices can either drain or protect your income. His engaging teaching style makes complex tax concepts easy to follow, helping you understand not just the “what,” but the “why” behind each option.

By the end, you’ll have a much clearer picture of how these two entities work and when it might be time to take the next step in your business journey. Whether you’re running a thriving LLC or considering the leap to an S Corp, this breakdown shows how the right move at the right time can make a lasting difference in your bottom line.

CHAPTERS:
0:00 Intro
0:18 Understanding Self-Employment Tax
1:01 Who Pays Self-Employment Tax?
1:32 Understanding the Numbers
2:31 Payroll and the S Corporation Advantage
2:39 How Payroll Works Inside an S Corporation
3:13 Back to the $100k Example
4:28 How the IRS Defines “Reasonable”
5:32 The Costs of Running an S Corporation
6:34 Here’s When It Makes Sense to Switch
7:26 How Income Flows Through an S Corporation
8:12 The Importance of Planning
8:59 Outro

*Disclaimer: I am not a financial advisor nor am I an attorney. This information is for entertainment purposes only. It is highly recommended that you speak with a tax professional or tax attorney before performing any of the strategies mentioned in this video. Thank you.

#scorporation #businesssturcture #switchtoscorp