There’s a reason why the S corporation is the preferred tax reporting entity for small businesses.
Most small business owners save substantial amounts of money on reduced Social Security and Medicare tax.
However, if you’re not starting out as an S corporation, there may be tax consequences to switching to an S corporation.
An LLC with a sole owner is a sole proprietor. An LLC with two or more owners is a Partnership. Well, you can’t just switch from being a sole proprietor or a partnership to a corporation without tax consequences.