Question 1

LLC vs S-Corp: which structure saves more on self-employment taxes?

Accepted Answer

An SCorp election can save significant selfemployment taxes compared to a default LLC — but only if your business earns enough to justify it. Here's how the math works:

Default LLC (sole proprietorship for tax purposes):
All net profit flows to your personal return on Schedule C and is subject to selfemployment tax (SE tax) of 15.3% (12.4% Social Security + 2.9% Medicare) on the first $168,600 of earnings (2024), then 2.9% on amounts above that. Plus, you owe ordinary income tax on the full net

Question 2

How do I deduct vehicle expenses for business use? Standard mileage vs actual expenses

Accepted Answer

You have two methods for deducting vehicle expenses for business use: the standard mileage rate or actual expenses. You generally choose one method for each vehicle and must stick with some restrictions.

Method 1: Standard Mileage Rate (Simpler)
 2024 rate: 67 cents per mile for business use
 Multiply your total business miles by $0.67
 Example: 15,000 business miles × $0.67 = $10,050 deduction
 You can also deduct parking fees and tolls separately (on top of the mileage rate)
 You CANNOT deduc

Categories

Small Business

LLC vs S-Corp: which structure saves more on self-employment taxes?

How do I deduct vehicle expenses for business use? Standard mileage vs actual expenses