As you consider that option, here’s a term that will help: QBI, or qualified business income. QBI is net income, not gross income. And this is important as you consider choosing taxation as an S corp.
Since an s corp is a pass-through entity, you can deduct up to 20% of QBI. In other words, the s corp taxation guidelines allow the owner to take the 20% QBI deduction on business income.
If the LLC is taxed as an S corp, the business owner pays self-employment tax only on employment income.