{"type":"rich","version":"1.0","provider_name":"Transistor","provider_url":"https://transistor.fm","author_name":"Simplify My Numbers | Saving 7-6-5 Entrepreneurs 5 Figures in Taxes","title":"08. The Truth Behind Business Entities: What Social Media Gets Wrong","html":"","width":"100%","height":180,"duration":944,"description":"What if the entity structure everyone online is telling you to choose doesn’t fit your business goals? Social media has created a flood of misinformation about business structures — LLCs, S corps, C corps — and most of it is either oversimplified or flat out wrong. The truth is, there is no one-size-fits-all answer. The right entity depends on your income, your industry, your family situation, and your long-term goals. Here's a breakdown of each structure, when it works, and when it doesn't — so you can stop following trends and start following strategy.HighlightsA single-member LLC does not automatically save you taxes — it is treated as a sole proprietorship for tax purposes and you still file a Schedule C on your personal returnOnce your LLC earns more than $50,000 in net income, it may be time to look at converting to another entity to reduce self-employment taxesOperating businesses (not passive real estate) pay self-employment tax of 15.3% on all net earnings under an LLC — both the employee and employer sideA sole proprietorship and the business owner are legally the same person, meaning zero liability protection — but it has one powerful use caseIf you have kids under 17, a sole proprietorship family management company lets you pay them with no Social Security, Medicare, or unemployment taxes — as long as wages stay under the standard deductionThe S corp shines when your net income exceeds $50,000 — you pay yourself a reasonable salary, and only that salary is subject to self-employment taxesThe Social Security wage cap in 2026 is $184,500 — above that, only Medicare tax continues to applyFix-and-flip real estate investors can benefit significantly from the S corp by separating their earnings into wages and distributionsPassive rental real estate should stay in an LLC — putting it in an S corp could trigger unnecessary self-employment tax exposureSeasonal businesses with unpredictable revenue may struggle to justify and consistently pay a reasonable...","thumbnail_url":"https://img.transistorcdn.com/E0Gc0wU8bIWldC9D-uQsDKrcetNgirG15Ha3M58Rug8/rs:fill:0:0:1/w:400/h:400/q:60/mb:500000/aHR0cHM6Ly9pbWct/dXBsb2FkLXByb2R1/Y3Rpb24udHJhbnNp/c3Rvci5mbS9mOWQy/MjhlZDliMTMzYTZk/Yjc5OTIzYzcxYzc5/NTYyNy5wbmc.webp","thumbnail_width":300,"thumbnail_height":300}