What is an S-Corp?
An S-Corp isn’t a type of business—it’s a tax status you can elect after forming an LLC. It allows you to split your income into:
W-2 salary (you pay self-employment taxes here)
Profit distributions (you don’t)
In theory, this can reduce how much you pay in taxes.
In reality? It comes with a ton of strings.
What’s the catch?
To qualify as an S-Corp, you have to:
Run real payroll (W-2s, pay stubs, filings)
File a separate business tax return every year
Track your books with perfect precision
Often hire a CPA and/or pay for ongoing accounting software
Stay compliant with multiple state and IRS rules
Most freelancers aren’t told this. Some platforms market the S-Corp as a one-click tax hack—but leave you holding the bag when the admin work piles up.
Let’s look at an example:
Scenario:
You’re a freelancer making $80,000 in total income.
| Sole Proprietor (LLC) | S-Corp (LLC + Election) |
Income | $80,000 | $80,000 |
Salary (W-2) | — | $40,000 |
Profit (distribution) | — | $40,000 |
Self-employment taxes | ~$11,000 | ~$6,000 (only on salary) |
Tax savings | — | ~$5,000 |
Additional costs | — | -$2,000 to $3,000/year (CPA, payroll, filings) |
Net savings | — | Maybe $2,000… if everything’s done right |
Now let’s say you made $45,000 instead.
You’d still need:
A payroll provider
A CPA
Extra filings
A second tax return
To manage W-2 and withholdings year-round
And your net savings? Zero or negative. You’d likely pay more in fees than you save in taxes.
So when does it make sense?
S-Corp starts to become worth it only if you’re profiting $100,000+ per year and you’re prepared to manage the admin, or pay someone to do it.
Otherwise, it’s just a fancy status that drains your time, your energy, and your wallet.
Why WorkMade doesn’t overprescribe S-Corps:
Some platforms market S-Corps as “the smart freelancer move.” But we’ve seen too many users get burned—set up with an S-Corp too early, only to get overwhelmed by payroll, underpay taxes, or spend thousands fixing bookkeeping errors.
We’re not here to sell you structure. We’re here to protect your time, money, and peace of mind.
What WorkMade does instead:
We help you:
Form an LLC to separate your business and personal finances
Automatically track income, expenses, and write-offs
Save and pay your taxes in real time
Optimize what you owe without the extra baggage
For most freelancers, that’s more than enough to stay organized, avoid penalties, and save thousands.
TL;DR:
S-Corps can help some high-earning freelancers—but they’re not the secret weapon most platforms make them out to be. If you’re under $100K in profit and not ready to run payroll, WorkMade already does what you need—without the extra cost or chaos.