Vantage
Reviewed by the Vantage Accounting Pros tax team · Nov 2026
Quick answer
An LLC is a legal structure; for taxes it can be treated as a sole proprietorship, partnership, S-corp or C-corp. Many small, profitable owner-run businesses do well as an LLC taxed as an S-corp. A C-corp mainly makes sense if you plan to raise outside investment or keep large profits in the business.
LLC on its own
A single-member LLC is taxed like a sole proprietorship by default, and a multi-member LLC like a partnership. Profit flows to your personal return and is subject to self-employment tax.
It's simple to run and a good starting point for a new business.
Electing S-corp
An LLC or corporation can elect S-corp status. You pay yourself a reasonable salary and take the rest as distributions, which can lower self-employment tax.
It adds payroll and a separate return, so it usually pays off once profit is steady.
C-corp
A C-corp pays its own 21% federal tax, and owners pay tax again on dividends. That double layer makes it less common for small owner-run businesses.
It can suit businesses raising investment, offering stock to employees, or reinvesting most of their profit.
This guide is general information, not advice for your situation. Talk to us about your numbers.