LLC, S-Corp, or Loan-Out — Which One Do I Need?
You don't pick a structure off a feeling. You pick it off your income. Here's the ladder, from your first paid beat to a full career.
Structure follows income — you climb the ladder as you grow. Most artists move through the same rungs in order: sole proprietor, then LLC, then S-corp election, then (only for the top earners) a loan-out. The trick is not skipping a rung before it pays off.
The ladder, one rung at a time
- Rung 1 — Sole proprietor (the default). You're here the moment you get paid. Nothing to file. Right when income is small or just starting.
- Rung 2 — LLC. Add a liability shield and a clean business identity once you have real income, contracts, or anything worth protecting.
- Rung 3 — S-corp election. Once profit is consistently high enough, elect S-corp on your LLC to cut self-employment tax via the salary/distribution split — after the payroll cost is worth it.
- Rung 4 — Loan-out corporation. For high, steady, career-shaped income with professionals running it. Overkill for everyone else.
How to know which rung is yours
Two questions do most of the work: How much profit are you keeping, consistently? and How much do you have to protect? Low and just starting: stay simple. Real, protectable income: get the LLC. Consistently high profit: model the S-corp. Big career-level income with a team: consider the loan-out. Skipping a rung early usually just adds cost and paperwork with no payoff.
The one rule under all of it
Whatever rung you're on, the fundamentals don't change: separate the money, track everything, keep receipts, and pay quarterly. Get those right and every structure works better — get them wrong and no entity saves you.
This is general education, not tax or legal advice — Done Deal Digital is not a CPA firm or a law firm. Business structure and tax choices depend on your income, your state, and your goals. For your situation, work it out with a qualified CPA or attorney.
That's the short version
Find your exact rung — and your next move
The full e-book turns this ladder into a decision you can actually make: the income ranges, the real math behind each jump, and the checklist to set up whichever structure fits you now — without paying for one you don't need yet.
Get the Guide — $39 →Or get every tax & money guide in one — The Complete Tax & Money Guide →