LLC vs SCorp: What’s the Real Difference and When Should You Switch ?

If you’re a small business owner, you’ve probably heard people say, “You should switch to an SCorp.” But is it actually right for you?

Let’s break it down in plain English.

1. LLC = Simple, Flexible, Low Maintenance

An LLC protects your personal assets and keeps things simple. Taxes flow through to your personal return. Great for:

• New businesses

• Side hustles

• Lowerprofit businesses

2. SCorp = Tax Savings When You’re Profitable

An SCorp is not a separate business type — it’s a tax election. The big benefit: You pay yourself a reasonable salary, and the rest of your profit can be taken as distributions, which are not subject to selfemployment tax.

This can save thousands when your business is consistently profitable.

3. When Should You Consider Switching?

Most owners benefit when:

• Net profit is $40k–$60k+

• You’re paying a lot in selfemployment tax

• You’re ready for payroll and bookkeeping requirements

4. Georgia Specific Considerations

Georgia has:

• State payroll requirements

• Annual registration fees

• SCorp state tax filings

Nothing scary — just things to be aware of.

What This Means for You

Choosing the right structure can save you money and protect your business. If you’re unsure whether an SCorp makes sense for you, RLA can run the numbers and give you a clear recommendation.