ENTITY SELECTION & TAX PLANNING: CHOOSE THE STRUCTURE THAT DECIDES YOUR TAX BILL
The gap between an LLC, S-corp, and C-corp can run into tens of thousands a year. We help you choose before the decision is hard to undo.
YOUR ENTITY IS THE FIRST TAX DECISION - AND THE ONE YOU CHANGE LAST
Most owners pick an entity when they form the business and never revisit it. But the structure you choose sets how profit is taxed, how you pay yourself, what you owe in self-employment tax, and which deductions you can reach. By the time a structure starts working against you — usually as profit grows — switching means elections, deadlines, and tax friction. Planning the choice up front is far cheaper than correcting it later.
Tax Planning Built for High-Income and High-Net-Worth Clients
An LLC that fit a side business at $40k of profit often becomes the expensive option at $200k, because every dollar of profit runs through self-employment tax. The same income inside an S-corp can be split between salary and distributions — and only the salary carries payroll tax. Multiply that gap across several years and the cost of “we’ll deal with it later” adds up fast.
Your entity affects you personally, not just the business
Compensation, profit distributions, retirement-plan options, and your personal tax bracket all move with the structure you choose. Entity planning looks at both sides — the business return and your 1040 — because that is where the real tax impact lands.
LLC VS. S-CORP VS. C- CORP: HOW THE THREE COMPARE
There is no universally “best” entity. The right answer depends on profit level, how much you take out versus reinvest, your role in the business, and your growth plans. The comparison below is the starting point we work from — not a recommendation. The decision turns on your numbers.
| LLC | S-Corp | C-Corp | |
|---|---|---|---|
| How profit is taxed | Passes through to your personal return | Passes through to your personal return | Taxed at the corporate level (flat 21%) |
| Double taxation? | No | No | Yes — taxed at the corporate level, then again as dividends |
| SE / payroll tax | All net profit hit by SE tax (15.3% up to the SS wage base) | Only your reasonable salary; distributions are not | Wages are; dividends are not, but are taxed twice |
| How owners are paid | Owner draws | Reasonable W-2 salary + distributions | W-2 salary + dividends |
| 20% QBI deduction | Generally available | Generally available | Not available |
| Admin burden | Lowest | Higher — payroll, comp support, separate return | Highest — corporate return + formalities |
| Often fit | New or lower-profit businesses; flexibility | Profitable owner-operators taking distributions | Retaining earnings; raising outside capital |
WHAT OUR ENTITY SELECTION PLANNING COVERS
Choosing a structure at
formation
We help new owners weigh the options before filing, so the structure fits both today’s profit and where the business is heading — not just the easiest box to check.
Re-evaluating a structure you’ve outgrown
Revenue growth, new owners, or a change in how you take money out of the business are all reasons to revisit a structure set years ago. We model whether an election or change still serves you.
Coordinating the election with the rest of your plan
An S-corp election in particular has timing rules and ongoing requirements. We plan the election alongside compensation, retirement contributions, and your personal tax position so the pieces work together — see our S-Corp Tax Planning service
WHO BENEFITS MOST
Founders choosing a structure for the first time
Early planning helps you weigh the real tradeoffs before an entity is filed and harder to change.
Owners whose profit has outgrown their original entity
Growth, new partners, or a different draw strategy are all signals it is time to re-evaluate.
Businesses that want structure tied to a real tax strategy
For owners past basic compliance who want entity decisions made inside a broader plan, not in isolation.
Founders choosing a structure for the first time
Early planning helps you weigh the real tradeoffs before an entity is filed and harder to change.
Owners whose profit has outgrown their original entity
Growth, new partners, or a different draw strategy are all signals it is time to re-evaluate.
Businesses that want structure tied to a real tax strategy
For owners past basic compliance who want entity decisions made inside a broader plan, not in isolation.
WHY BUSINESS OWNERS CHOOSE PREMIUM TAX PLANNERS
We plan the decision before it's locked in
Many of the best options exist only before an election or change is filed. We work proactively, while the choices are still open.
We weigh owner-level impact, not just the business return
Entity choice changes how you are paid and taxed personally. We build the recommendation around both sides of the equation.
We translate the technical tradeoffs into a decision you can make
You get a clear read on what each structure means for your numbers — not a stack of jargon.
OUR ENTITY SELECTION PROCESS
Review the current or proposed structure
We start with your entity, ownership, current tax treatment, and goals — or, for a new business, the proposed structure and what is driving it.
Compare the tax impact across your real numbers
We model how each option affects the business and you personally, so the comparison reflects your situation — not a generic example.
Recommend the next step — keep, elect, or restructure
You leave with a clear recommendation and the timing to act on it.
RELATED BUSINESS TAX PLANNING SERVICES
FREQUENTLY ASKED QUESTIONS
An LLC and an S-corp both pass profit through to your personal return; a C-corp is taxed separately at a flat 21% and faces double taxation on dividends. The biggest practical difference for owner-operators: in an LLC all profit is subject to self-employment tax, while an S-corp lets you split income between a reasonable salary (taxed for payroll) and distributions (not).
No. The S-corp payroll-tax advantage only pays off above a certain profit level, because it adds payroll, a separate return, and reasonable-compensation requirements. Below that line, the simpler LLC is often the better economic choice. It depends on your profit and how much you take out of the business.
When revenue grows materially, when you add owners, when you change how you pay yourself, or when a major event (a sale, a new line of business) is on the horizon. Structures that fit a smaller business often stop fitting as it scales.
Sometimes. Electing S-corp status can reduce self-employment tax for a profitable owner-operator, and entity choice affects access to the 20% QBI deduction. Whether a change helps depends on your profit, your role, and your long-term plans — which is what planning is for.
Yes. Premium Tax Planners is based in Northfield, Illinois, and serves the Chicago area and North Shore suburbs, plus clients nationwide through secure virtual meetings.
CHOOSE A STRUCTURE THAT WORKS AS HARD AS YOU DO
The right entity can save you money every year you own the business — and the wrong one can quietly cost you. Let’s get it right before it’s hard to change.
- Confidential
- No obligation
- Available nationwide