LLC vs S-Corp vs C-Corp: Tax Strategies for Your Personal Errands & Concierge Service
You're busy running errands, shopping for clients, or providing companionship, and now it's time to choose the right legal structure for your business. The LLC, S-Corp, and C-Corp options aren't just legal choices; they're tax decisions that can save or cost you thousands each year. For a personal errands or concierge service, the best choice depends on your profit level, how you take money out, and your plans for growth.
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The Quick Answer
For most solo errand runners, personal shoppers, or new senior companion services, an LLC (taxed as a sole proprietor) is the right starting point. It’s simple, flexible, and avoids double taxation. Consider electing S-Corp status when your net profit from fetching groceries or assisting seniors consistently exceeds $50,000 per year — the self-employment tax savings become significant at that level. A C-Corp is almost never necessary for an independent errand or concierge business unless you plan to raise venture capital to build a large-scale, multi-state operation.
Side-by-Side Breakdown
An LLC (default, pass-through) means all net profit from your personal shopping or senior companion tasks is subject to self-employment tax (15.3% on the first $174,400 of net earnings in 2024). This income simply passes through to your personal tax return. It’s the simplest to maintain, requiring minimal paperwork beyond your regular tax filing, and there's no double taxation.
An LLC with S-Corp Election keeps the pass-through taxation. You'll pay yourself a reasonable salary (e.g., what you’d pay a full-time errand manager in your area), which is subject to payroll taxes. Any remaining profit you take as a distribution is NOT subject to the 15.3% self-employment tax. This saves you money, but adds costs like payroll setup, quarterly payroll filings, and higher CPA fees.
With a C-Corp, corporate income is first taxed at 21% (federal). Then, owners also pay tax on any dividends or salary they take – this is called double taxation. C-Corps are useful if you plan to issue multiple share classes for investors, retain earnings at the lower corporate rate, or if you ever aim for a massive scale requiring institutional investment. For a typical errand or concierge service, this structure is usually overkill and creates unnecessary tax burdens.
When to Stay an LLC
Keep your personal errand or concierge business structured as an LLC if your net profit from driving, shopping, or assisting clients is under $50,000 per year. At this level, the potential S-Corp tax savings typically don't outweigh the added administrative costs and complexity. It's the simplest possible structure, perfect while you're validating your services, building your client base, and ensuring consistent income. If you're a solo errand runner or personal shopper without plans to bring on institutional investors, an LLC provides maximum flexibility in managing your finances and is easy to set up and maintain.
When to Elect S-Corp Status
Consider electing S-Corp status when your personal errand or concierge business is consistently netting over $50,000 per year. If you're currently paying self-employment tax on all of that profit, an S-Corp election can significantly reduce your tax burden. The math: if your errand business earns $150,000 in profit (after deducting costs like gas, insurance, and supplies) and you pay yourself a reasonable salary of $80,000 (what a market-rate full-time errand manager would earn), you save 15.3% self-employment tax on the remaining $70,000 distribution — that's approximately $10,710 in annual tax savings. Make this move when your CPA confirms the numbers make sense for your specific income and expenses.
When to Form a C-Corp
This is extremely rare for personal errand or concierge businesses. You should only consider a C-Corp if you plan to raise money from venture capital or institutional investors — VCs require C-Corps because they need preferred stock. It’s also required if you plan to offer qualified stock options to employees (ISOs require a C-Corp). For instance, if your vision is to build a national chain of AI-powered errand services, requiring millions in startup capital, a C-Corp would be necessary. This is not the structure for growing your local senior companion service or adding another personal shopping client.
The Verdict
Start your personal errand service, personal shopping venture, or senior companion business as an LLC. It's straightforward, protects your personal assets, and simplifies your early tax filings. Make the S-Corp election when your CPA confirms the self-employment tax savings on your errand business profit exceed the additional compliance cost (typically at $50,000-$80,000 in net profit, depending on your state and specific expenses). Convert to a C-Corp only if you pursue venture capital funding. Do not form a C-Corp speculatively; the administrative overhead is significant, and the double-taxation problem is real if your business doesn't raise institutional capital and scale rapidly.
How to Get Started
For LLC formation: File Articles of Organization with your state's Secretary of State (costs vary from $50-$500 depending on the state). This crucial step protects your personal assets from business liabilities, like a delivery accident or a client dispute. Get an EIN from irs.gov (free, takes about 5 minutes online) and use it to open a dedicated business bank account. Keep your business and personal finances separate.
For S-Corp election: File IRS Form 2553 within 75 days of the start of the tax year you want it to apply. Before filing, have a CPA calculate a reasonable salary for yourself, considering what a similar errand manager or concierge professional would earn.
For C-Corp: If you absolutely need one, incorporate in Delaware (the standard for VC-backed companies). Tools like Stripe Atlas or Clerky can help, or you'll need a startup lawyer. This step is usually not relevant for personal service businesses.
RECOMMENDED TOOLS
Stripe Atlas
Delaware C-Corp formation in minutes
Clerky
Startup legal documents and incorporation
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FREQUENTLY ASKED QUESTIONS
Can I switch from an LLC to an S-Corp later?
Yes. An LLC can elect S-Corp tax treatment without changing its legal structure. File IRS Form 2553. The election must be made within 75 days of the tax year start.
What is a reasonable salary for S-Corp purposes?
The IRS requires that S-Corp owner-employees pay themselves a salary comparable to what the position would pay in an arm's-length transaction. CPAs typically recommend 40-60% of total S-Corp profit as salary, with the remainder taken as distribution.
Does forming a Delaware C-Corp mean I pay Delaware taxes?
Delaware has a franchise tax (minimum $175-$400/year for small companies). You do not pay Delaware income tax unless you have business operations or employees in Delaware.