Choosing the right business entity is one of the most important early decisions you'll make. In Texas, the LLC and the S-Corporation are two of the most popular options — both offer liability protection, but they're taxed differently.
A standard LLC is simple to form and maintain. Profits pass through to your personal return, but you generally pay self-employment tax on all of your net earnings. An S-Corporation election can reduce that self-employment tax by letting you split income between a reasonable salary and distributions — though it comes with added payroll and filing requirements.
The right choice depends on your profit level, how you pay yourself, and your long-term goals. Many owners start as an LLC and elect S-Corp status once profits reach a level where the tax savings outweigh the extra administration.
Before you file, it's worth modeling both scenarios. We help Texas business owners choose the right structure, handle the formation paperwork, obtain an EIN, and stay compliant with Franchise Tax and Public Information Report requirements.