Most people think an S corporation increases your chance of an audit—but the truth is the exact opposite. When you move from a sole proprietorship or single-member LLC to an S corporation, your audit risk actually drops significantly.
Here’s why the S corp structure is such a game changer:
• Lower audit risk: The IRS scrutinizes Schedule C sole proprietors far more often. S corps are audited far less.
• Bigger deduction opportunities: You unlock strategies like the solo 401(k), accountable plans, and better classification of expenses.
• Cleaner financials: A W-2 salary and formal books make you look stronger for mortgages, lending, and future business opportunities.
• Same legal protection as an LLC: You’re still an LLC for legal purposes—you’re simply electing S corp taxation for better optimization.
Switching from an LLC to an S corporation isn’t just about saving taxes—it’s about leveling up your entire business structure and building a more professional, scalable financial foundation.
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