MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

Why LLCs Are 15x More Likely to Get Audited

19 Nov 2025 · 1 min

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In this concise video, Mark Kohler warns that operating a single‑member LLC that files as a Schedule C (a disregarded entity) makes a business about 15 times more likely to be audited by the IRS. He explains that such LLC owners also overpay self‑employment tax because they cannot take advantage of the tax savings available to S‑corporation shareholders. Kohler’s solution is to elect S‑corporation taxation for the LLC, which both cuts the audit risk dramatically and reduces the self‑employment tax burden. He directs viewers to a follow‑up video for a deeper dive on operating as an S‑corp LLC.

Chapters

You are 15 times more likely to be audited if you are just operating as an llc. Now that may shock you, but let me explain why. If you are an operational business landscaper, plumber, electrician, you're selling online and you're just an llc. That means you're reporting as a Schedule C or a single member LLC or a disregarded llc. When that's the case, yes, you are more likely to be audited and 15 times more likely to be audited as a Schedule C. However, you're also paying way too much in tax. So what's the solution? You move to the S corporation. When you take your LLC and tax it as an S corporation, you're still an LLC but you're taxed as an S corporation. Now your chances of an audit went down by 15 times and you're also going to be saving on self employment tax. Get over and watch my other video on why to operate as an S corp llc. But if you're just a plain old llc, buckle up. You're paying too much in tax and you're probably going to get audited.