LLC vs S-Corp: Key Differences Business Owners Should Know 1️⃣ They are NOT the same thing • LLC is a legal business structure created at the state level • S-Corp is a tax election made with the IRS • An LLC can elect to be taxed as an S-Corp if eligibility requirements are met 2️⃣ Self-employment taxes • LLC (default taxation): Owners pay self-employment taxes on the entire net profit (if taxed as a sole proprietor or partnership) • S-Corp: Owners pay payroll taxes only on a reasonable salary R