Made the mistake of double taxation on our basic LLC due to self-employment tax

22 Nov 2023 · 0 min

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Two speakers discuss a tax mistake regarding an LLC: Speaker A reports being subject to "double taxation" because self-employment tax applied to their basic LLC and says they lacked an S Corp; Speaker B responds that it depends on activities and structure but that S Corp treatment can often be used to reduce or avoid self-employment tax in many cases. The excerpt is a brief, informal cautionary note about LLC vs S Corp tax treatment.

One mistake we made is on one of our LLCs. Back in the day it was a basic LLC, but I was getting double taxation because self employment tax on top of it because I didn't have S Corp. Is that right?
I mean, it depends what you do and how you do it, but self employment tax is a big issue. There's times where you're not going to get around it, but there's plenty of times where, yeah, with an S Corp you can typically avoid SE tax.