If you’re a content creator running your business as a sole proprietor or single-member LLC, you may be wondering whether becoming an S Corp makes sense. An S Corp is not a new type of business. It is a tax election that changes how creator income is taxed and can significantly reduce self-employment taxes once your earnings reach a certain level. In this guide, we will break down what an S Corp is, how it works for content creators, and when switching to an S Corp can be a smart tax-saving move.
What Is an S Corp for Content Creators?
Let’s start with the basics. An S-corp (short for “S Corporation”) isn’t a business type you register like an LLC. Instead, it’s a tax status that certain businesses (often LLCs) can elect with the IRS. The main reason to choose S-corp status is to potentially lower your self-employment taxes.
As a content creator, you probably make income through brand deals, ad revenue, affiliate marketing, or client work. As a sole proprietor or single-member LLC, all that income is taxed as self-employment income, which means you’re on the hook for the full 15.3% self-employment tax rate (on top of federal and state income tax).
When you were employed by someone else, your employer pays half of your self-employment taxes. That means you pay 7.65% and your employer pays 7.65%.
With an S-corp, you split your income into two categories:
- A reasonable salary that you pay yourself (subject to self-employment taxes)
- Distributions (aka profits) that you can pay out to yourself, which are not subject to self-employment tax
Because it lowers the amount of income that is subject to that 15.3% withholding, it can significantly lower your overall tax bill.
S-corp status is generally more beneficial once your income reaches $100,000 a year. Below that threshold, the savings might not outweigh the extra costs of running payroll and filing corporate taxes.
What Changes When You Become an S Corp
Switching to an S-corp isn’t a massive shift in how you operate, but a few things will feel different:
First, you’re now on payroll (sort of). You’ll need to pay yourself a consistent salary through a payroll system, even if you’re the only person in your business. This means setting up payroll software or hiring a service to handle tax withholdings, filings, and issuing you a W-2 at year’s end.
Next, you may have more paperwork. As an S-corp, you’ll need to file a separate tax return for your business (Form 1120-S), along with issuing W-2s for yourself and any employees. And this tax return is due earlier than your regular tax return, typically on March 17 instead of April 15. (This date sometimes shifts around if it falls on the weekend.)
Finally, you’ll probably want to hire a bookkeeper or accountant. Keeping your books clean becomes more important. You’ll need to track salary payments, distributions, and operating expenses accurately. If you’ve been winging it with spreadsheets, this might be the time to bring in a pro.
What Stays the Same?
The core of your business doesn’t change. You’re still your own boss. You still decide what to post, which clients to work with, and how to grow your audience. Becoming an S-corp doesn’t alter your creative freedom. It just gives you a new way to manage the money side of things.
Is an S Corp Worth It for Content Creators?
If your content creation business is generating consistent income, switching to an S-corp can be a smart move. You’ll likely save a lot on taxes, and it adds a level of structure that can be helpful as your business grows.
We’ve seen creators save $6,000 to $10,000 on their taxes by switching to an S Corp. Of course, it is very important that you are able to meet the new expectations that come with an S Corp. It’s not for everyone, and it’s okay to take your time deciding if it’s right for you.
Work With A Creator Tax Professional
When in doubt, talk to a tax professional who understands creative businesses. They can help you run the numbers and figure out if the S-corp path makes sense. And yes, that is our plug for our services. We can provide advice on when it’s time to move to an S-corp and manage the bookkeeping and tax filings that keep you compliant.
Becoming an S-corp can feel like stepping up your business game, but it doesn’t have to be overwhelming. With the right support and a little planning, it can be a huge step up for your business. Book a free call with a creator tax advisor to see if an S Corp could save you thousands this year.