Accounting Expert Karen Eberhart Metcalfe Discusses the Differences Between an LLC and an S-Corp in HelloNation

BOLINGBROOK, Ill., Nov. 15, 2025 (GLOBE NEWSWIRE) -- When it comes to launching or growing a company, one of the most crucial early decisions any small business owner must make is selecting the right business structure. According to a HelloNation article, this choice has far-reaching consequences for taxes, operations, and long-term planning. Karen Eberhart Metcalfe of Eberhart Accounting Services, PC in Bolingbrook, Illinois, shares her professional insights on the differences between an LLC and an S-Corp, and how Illinois business owners can determine which option best fits their goals.

The article explains that both the LLC and S-Corp structures offer liability protection and important financial benefits, but they differ in how profits are distributed and taxes are paid. An LLC, short for Limited Liability Company, is often the preferred starting point for new entrepreneurs because of its simplicity and flexibility. It separates business assets from personal assets, ensuring liability protection while allowing profits and losses to pass through directly to the owner’s personal tax return. For many small business owners in Illinois, this pass-through taxation keeps accounting simple and avoids the double taxation associated with traditional corporations.

However, as a business becomes more profitable, an S-Corp can provide greater tax efficiency. While both structures safeguard the owner through liability protection, an S-Corp offers a strategic advantage when it comes to managing self-employment tax. Eberhart Metcalfe explains that an S-Corp owner can divide income into two categories: salary and distributions. Only the salary portion is subject to payroll taxes, while distributions are not, potentially saving thousands of dollars each year.

For example, the article illustrates how an Illinois business owner earning $120,000 through an LLC would pay self-employment tax on the entire amount. By electing S-Corp status and designating $70,000 as salary and $50,000 as a shareholder distribution, the owner could significantly reduce their tax burden. Karen Metcalfe notes that this kind of strategic planning can make a measurable difference in long-term profitability.

Still, she cautions that the S-Corp structure comes with additional administrative responsibilities. Owners must manage payroll, file quarterly reports, and maintain corporate records to comply with federal and state regulations. In Illinois, that also means paying state taxes and keeping filings current with the Department of Revenue. For smaller or newer businesses, this added complexity may outweigh the potential tax benefits, at least initially.

Another distinction lies in flexibility. LLCs allow owners to reinvest profits or distribute income in a variety of ways, while S-Corps must distribute earnings based strictly on ownership percentage. For Illinois businesses with multiple partners or family members, the flexibility of an LLC often proves more practical.

Karen Metcalfe also emphasizes the importance of understanding Illinois-specific rules. Both LLCs and S-Corps must file annual reports and pay related fees, but the procedures and costs can differ. Consulting with a local accountant familiar with Illinois business regulations ensures compliance and helps owners take advantage of available deductions.

The best choice depends on long-term goals. Entrepreneurs expecting consistent growth and higher profits may benefit from electing S-Corp status sooner, while those in early or fluctuating stages of business may prefer to remain an LLC until revenues stabilize. Many Illinois business owners start as an LLC and transition to an S-Corp later, once income levels justify the additional formality and paperwork.

Eberhart Metcalfe also notes that each structure has implications for retirement planning. With an S-Corp, paying oneself a salary enables contributions to retirement plans like a SEP IRA or Solo 401(k). For LLC owners, contributions are based on net income, which can vary more widely from year to year. Evaluating these differences is an important part of building a sustainable financial plan.

Ultimately, there is no universal answer. Each business structure offers unique advantages depending on the owner’s goals, size, and stage of growth. What matters most is making an informed decision based on accurate financial projections and professional advice. Eberhart Metcalfe encourages entrepreneurs to consult an accountant before forming or restructuring their company to ensure the choice aligns with their current situation and future vision.

As the HelloNation feature concludes, choosing the right business structure doesn’t just determine how a company operates; it sets the foundation for financial success. For Illinois business owners weighing the benefits of an LLC versus an S-Corp, expert guidance can mean the difference between short-term savings and long-term growth.

The article, LLC or S-Corp: What’s Best for You?, features insights from Karen Eberhart Metcalfe of Eberhart Accounting Services, PC in HelloNation.

About HelloNation
HelloNation is a premier media platform that connects readers with trusted professionals and businesses across various industries. Through its innovative “edvertising” approach that blends educational content and storytelling, HelloNation delivers expert-driven articles that inform, inspire, and empower. Covering topics from home improvement and finance to business strategy and lifestyle, HelloNation highlights leaders making a meaningful impact in their communities.

HelloNation Staff
info@hellonation.com
www.hellonation.com

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Accounting Expert Karen Eberhart Metcalfe Discusses the Differences Between an LLC and an S-Corp in HelloNation

Accounting Expert Karen Eberhart Metcalfe Discusses the Differences Between an LLC and an S-Corp in HelloNation

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