Lots of good advice here. I’d offer one small correction and one big missing piece. Both have to do web the tax benefits of the S-Corp structure.

First, as a sole proprietor, you get to deduct the “employer” half of your self employment taxes. It’s built into the formulas used in the Schedule SE. That means the S-Corp doesn’t help with that.

The really good news is that instead, in your example of $100k profit where you take $50k as salary, you actually pay 0% payroll taxes on the other $50k. That’s a saving of 15.3% on $50k, or $7650!

Of course, you then have to probably pay an accountant to do your corporate tax return, and a payroll processor to process your payroll, even if you’re the sole employee.

Still, you’ll come out ahead of your profit is high enough to pay you a defensible salary and leave tens or hundreds of thousands of dollars to take as a profit distribution.