Many US entrepreneurs set up an LLC in the beginning, because it is straightforward and not too expensive. Generally, this is a good approach for the start as LLCs offer liability protection and other advantages. However, entrepreneurs are often not aware that with increasing income, switching from LLC to S Corp makes financial sense.
Why you should consider switching from LLC to S Corp
As your income from your LLC increases, so does the self-employment tax. You earn more, you pay more tax, but your ability to contribute to retirement accounts does not change. This is where converting the LLC to S Corp has advantages. Read more