Starting as a sole proprietor is simple — but as your business grows, that simplicity could be costing you money, exposing you to risk, and limiting your potential. Knowing when to upgrade your business structure is critical for financial protection and tax efficiency.
🔍 Key Signs It’s Time to Switch:
- You’re Earning More Than $40,000/Year
At this point, forming an S Corporation may reduce your self-employment tax burden through salary/distribution splits. - You Want Legal Protection
Sole proprietors have no liability shield. An LLC helps protect your personal assets from business lawsuits or debts. - You’re Hiring or Taking on Partners
Multi-member LLCs or S Corps provide better frameworks for ownership, profit sharing, and formal roles. - You Want to Build Business Credit or Raise Capital
Banks and investors often prefer to work with registered legal entities.
⚖️ LLC vs. S Corp
- LLC: Simple, flexible, offers liability protection.
- S Corp: Includes all the benefits of an LLC but adds payroll requirements and tax-saving opportunities.
Thinking of Making the Switch? Let’s Talk.
We help business owners choose and set up the right legal structure — from sole prop to LLC or S Corp — with taxes, liability, and growth in mind.
📅 Book your Entity Structure Consultation now
👉 https://calendly.com/castlerocktax/30min
📲 Prefer to talk first? Call us at 786-686-6285