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Just so I understand, with an S Corp, only a "reasonable" salary for the owner (me) is subject to self-employment tax, whereas with an LLC, all net profits are subject to self-employment tax. So I'd pay less self-employment taxes with an S Corp ?

For getting an understanding of things in general, that is correct. As Phil pointed out, technically it's not Self-employment tax but FICA tax that the S Corp and you as an employee will be paying. Not that's it's any different in terms of the actual tax dollars, as they are functionally the same tax.

And just to clarify, I presume that under either legal structure, I'm paying income taxes on the entirety of the net profits, so that's a push ? With the LLC, it all shows up as my income on schedule C and is all subject to income taxes (on top of self-employment tax); with an S corp, the salary shows up as salary income (subject to both income and self-employent tax) and the remainder shows up on schedule E (subject to income tax only). Do I have that right ?

Again, for comparing the two structures, yes that is correct. In the nitty gritty details, your FICA tax will be withheld by the S Corp and paid on your behalf (along with the same taxes withheld from your employees).

Since you mention the need for the liability protection, I'll mention a personal bias against LLCs. Depending on your state, they have not been around very long when compared to corporations, and their limitations on liability are not as well-tested and understood as with a corporation. If you desire some certainty in your liability protection, a corporation is probably the way to go.

--Peter <== showing some personal biases in this area
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