Can I Reduce My Self-Employment Taxes by Forming an LLC?

A basic LLC (taxed as a sole proprietor) does not reduce your self-employment taxes — all net profits are still subject to the 15.3% SE tax. However, an LLC can elect to be taxed as an S-Corporation, which can reduce SE taxes once your profits are high enough. The LLC itself is not a tax classification — it's a legal structure. How your LLC is taxed (sole prop, partnership, S-Corp, or C-Corp) determines your tax bill. Forming an LLC without changing your tax election has no immediate impact on your self-employment tax liability.