If You’re Self-Employed, This Tax Decision Is Worth Understanding

If you’re self-employed and taxes always feel confusing, you’re not alone.
Most business owners are focused on running their business — not on how entity structure affects taxes until it’s too late.

What many people don’t realize is that how your business is set up can significantly impact how much you owe the IRS.

That’s why I sat down with tax resolution and tax planning expert Alexander Goussis to talk through one decision that comes up often: LLC vs. S-Corp.

Why This Conversation Comes Up So Often

A lot of people form an LLC because they’re told it’s “the right thing to do.”
And for liability reasons, that can make sense.

But from a tax perspective, an LLC is often just the starting point — not the end goal.

According to the IRS, many small businesses operate as pass-through entities, meaning profits flow directly to a personal tax return and are taxed accordingly.
https://www.irs.gov/businesses/small-businesses-self-employed/business-structures

If you’re profitable, the way that income flows matters more than most people realize.

LLCs, S-Corps, and Self-Employment Tax

Here’s the key difference most people miss:

• LLCs and partnerships are typically subject to self-employment tax

• S-Corps can reduce that exposure by changing how income is classified

The IRS explains that self-employment tax covers Social Security and Medicare and applies differently depending on how income is earned.
https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

As Alexander explains, once a business reaches certain profit levels, continuing as an LLC may mean paying more in self-employment taxes than necessary.

That doesn’t mean everyone should be an S-Corp — but it does mean the decision should be intentional.

The Timing Matters More Than People Think

One of the biggest misconceptions is that tax decisions can only be made before the calendar year ends.

In reality, there are situations where:

• An S-Corp election can be made retroactively

• Certain elections must be filed by specific deadlines, such as March 15

• Waiting too long can close the door on legitimate planning opportunities

The IRS outlines election timing and filing requirements for S-Corporations directly:
https://www.irs.gov/forms-pubs/about-form-2553

This is why early-year conversations matter — not after a tax bill shows up.

How Business Structure Impacts More Than Taxes

This topic doesn’t just affect what you owe the IRS.

Your business structure can also impact:

• How income is documented

• How returns are filed

• How lenders evaluate income if you’re applying for a mortgage

The Consumer Financial Protection Bureau highlights how income documentation and financial structure affect major financial decisions.
https://www.consumerfinance.gov/consumer-tools/

We see this often when borrowers aren’t sure how they file — because income may flow directly through a personal return instead of a separate business return.

Understanding this ahead of time prevents confusion later.

Watch the Full Conversation

In this video, we walk through:

• When an S-Corp election may make sense

• Why self-employment tax catches people off guard

• How LLCs, partnerships, and S-Corps are taxed differently

• When to have a conversation before deadlines hit

Watch the full video here:

How to Get Clarity on Your Specific Situation

Every business is different.
Profit levels, timing, and future plans all matter.

If you’re self-employed and want clarity on tax structure or IRS concerns, having a conversation can help you understand what options may still be available.

Alexander Goussis
Tax Resolution & Tax Planning Specialist
Freedom Tax Relief Services

Website: https://freedomtaxreliefservices.com
Website: https://irsawaytoday.com
Phone: 516-708-6645
Email: [email protected]

Final Thought

At Interconnect Mortgage, our goal is education — not pressure.

When tax decisions, business structure, and homeownership overlap, clarity matters.
The earlier you understand how the pieces fit together, the more options you tend to have.

If you want clarity on how this connects to your financial or homeownership plans, the first step is a conversation — not a commitment.

👉 Schedule a conversation here:
https://interconnectmortgage.com/calendar

Disclaimer:
This content is for educational purposes only and not a commitment to lend.
Interconnect Mortgage — NMLS #1720882.
Licensed in Florida, Georgia, and South Carolina.
Check licensing at NMLS Consumer Access.