Looking to cut down on self-employment taxes on your partnership income? Converting your partnership into an S corporation might be the answer.

If you currently run your business as a partnership or an LLC taxed as a partnership, you’re probably familiar with the sting of self-employment taxes. Unlike shareholder-employees of an S corporation, who only pay Social Security and Medicare taxes on their salaries, partners typically get hit with self-employment taxes on their entire share of the business’s net income. That can add up fast.

By transitioning to an S corporation, you can restructure how you take your income—splitting it between salary and profit distributions. The big advantage? Those profit distributions are not subject to self-employment tax, potentially saving you thousands each year.

So, if reducing your tax burden sounds appealing, listen in as we break down how a tax-free Section 351 incorporation works and what you need to know before making the move.

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