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Nolan Accounting Center
4262 South 108th Street
Greenfield, WI 53228
Phone: 414-425-5690
Fax: 414-425-2373
Website: www.nolanaccounting.com
February 2026
February 2026 Q and A
QUESTION:
What's the difference between a single-member LLC and an S-Corp?
ANSWER:
A single-member LLC is taxed as a sole proprietorship by default: all profits are subject to 15.3% self-employment tax. An S-Corp, however, allows the owner to pay themselves a reasonable salary (subject to payroll taxes) while taking the remaining profits as taxfree distributions. This split can save thousands in taxes once profits exceed about $50–60k annually.The trade-off? S-Corps require formal payroll, annual filings, and stricter IRS rules, making them a better option for higher-earning businesses seeking tax efficiency.
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