S-Corp vs. Schedule C: When It Makes Sense to Switch

Choosing the right business structure can make a big difference in your tax bill and long-term growth. Most entrepreneurs start as Schedule C filers because it’s quick and simple — but as profits increase, so do tax liabilities. That’s where an S-Corporation can help.

When Schedule C Works Best

If you’re just getting started and earning under $60,000 in profit, filing as a Schedule C sole proprietor is straightforward and low-cost. However, it means you’ll pay self-employment tax on 100% of your earnings.

When It’s Time to Consider an S-Corp

Once your profits grow, an S-Corp structure lets you split income between a reasonable salary and distributions, reducing the amount subject to self-employment tax. This structure also adds credibility with banks, partners, and clients.

Planning Ahead

The conversion process involves filing an S-Corp election with the IRS, setting up payroll, and maintaining accurate books. Making the change before a new tax year ensures you start fresh with the right structure.

How JBH Financial Can Help

JBH Financial specializes in business formation and structural planning. We’ll help you analyze your income, file the correct paperwork, and get your bookkeeping ready for S-Corp compliance.

Whether you’re ready to switch or starting from scratch, our team will make sure your business is set up for success in 2026 and beyond.

-JBH Financial Services