Hey Reader,

If you’ve ever Googled “Should I be an S-Corp?”… you’re not alone.

Around this time of year, a lot of therapists start wondering about this.

Let’s simplify it.

First: an LLC is a legal structure.
Sole prop or S-Corp is a tax classification.

And yes… it can affect how much you pay in taxes.

Here’s the high-level breakdown:

Sole Proprietor (or single-member LLC taxed as sole prop)​
You pay income tax + self-employment tax (15.3%) on your net profit.

Simple. Straightforward.
But once profit increases, that self-employment tax adds up.

S-Corporation​
You pay yourself a “reasonable salary” — meaning you run payroll for yourself just like you would if you were an employee at any other company. Taxes are withheld from your paycheck (Social Security, Medicare, income tax).

Remaining profit can then be taken as distributions, which are not subject to self-employment tax.

This can reduce overall taxes — but only if your profit is high enough to justify:
• Payroll costs
• Tax prep complexity
• Ongoing compliance

For many therapists, S-Corp starts making sense after about $70k+ net profit… but it’s not just about hitting a number.

It’s about:
• Stability of income
• Cash flow
• Administrative tolerance
• Long-term growth plans

The takeaway?

Your entity should support your practice — not complicate it.

Before making any changes:
• Look at last year’s net profit
• Project this year realistically
• Talk to a qualified tax professional about your specific situation

Switching to an S-Corp can be smart.

Switching too early can create unnecessary stress.

If you’ve been wondering whether your current setup still makes sense, this is a great month to review your numbers — not just react at tax time.

You don’t need to guess.

You just need good data.

The Update: News for Your Practice

1) Policy shifts are impacting psychologists’ ability to deliver care​

Psychologists navigate a landscape where access, equity, and clinical integrity face mounting challenges.

2) When to Expect 2026 IRS Income Tax Refunds​

When will I get my refund? Everybody wants to know. Here's a good estimate, with an easy chart and no numbers to enter.

3) What SMBs Need to Know About the Economy, Taxes, and AI in 2026​

Some higher level updates about the economy and tax as we get into 2026.

Best,

Emily

P.S. Curious about S-Corp? Reply “S-Corp” and my team will follow up with next steps.