The Benefits of LLCs vs S Corporations: What You Need to Know

Hey, Mike, you ever set yourself up for some payback?

No.

Why would I do that? What kind of payback?

Ah, these are the questions I'm asking myself because apparently that's what I did to myself and you're gonna hear all of it here on 5-Minute Finance.

I'm Matt Robeson and that is Mike Morton who's about to administer the pain.

He usually administers practical, easy to implement steps that you can use to lighten your load, take things off your to-do list and get you on your way, make your financial life and your whole entire life easier.

But no, today I've hoisted myself on my own petard I'm not entirely sure what a petard is, but I've hoisted myself on one, and Mike is going to give me some comeuppance.

Here's what happened.

Back in episode 195, titled Navigating Tax Season, Top 10 Smart Saving Tips for 2026, a listener wrote in, transitioning from W-2 to contracting with the same clients expecting to make over $200,000, should they create an LLC? And I apparently said the following.

I want to bookmark the idea that I want to do a deeper dive on LLCs, when to and when not to, and what the use is, because this is definitely something that comes up.

Well, Mike.

It's coming up, and I asked for

it, so I guess I'm going to get it.

It's here.

You and all the listeners are going to get it now, when and where to use an LLC and what that even means.

All right.

Give me a little more.

What are we going to get into on this episode? All right.

Today, we're going to break down what is an LLC.

People say like, oh, yeah, you should start a business.

You got to like start an LLC.

So LLC, then the S-corp election.

That's the next thing people say.

Oh, come on.

You got to be an S-corp.

You know, you're going to save tons of money in taxes.

You don't have to pay tax.

You're an S-corp.

So what's the real thing with S-corps? We're going to break down the real math, OK, in a scenario being an S-corp and not.

Five times an LLC makes sense and five times that it doesn't.

That is a phenomenal amount of very, very useful stuff.

But it's not all.

Oh, wait, there's more.

You'll want to stay tuned.

We've got a listener question about an $18,000 side hustle.

We've got a worth-knowing that is truly an astounding fact, like a mind-bending fact, and it involves Star Wars.

So that's fun.