LLC or sole proprietor: what changes for taxes

A single-member LLC is taxed exactly like a sole proprietor by default. You still file Schedule C and pay self-employment tax. The LLC is about liability, not tax.

When an S corporation election helps

Once profit is steady above roughly $80,000 to $100,000, electing S corporation status can lower self-employment tax, because you pay yourself a reasonable salary and take the rest as distributions. It adds payroll, a separate return and state fees, so run the numbers first.