An LLC, Limited Liability Company, is a state legal entity, not a tax entity. If you want to be taxed as a corporation, you will need to file an entity election form with the IRS, otherwise you will default to either a sole proprietor - if a single member LLC, or a partnership - if a multi-member LLC.
Basically, the tax savings will be on employment taxes - Social Security and Medicare, and on the deduction of the SEP IRA contributions by the company.
There are many considerations when choosing a tax entity. Corporations are subject to income tax, currently at 21% of their profit, so you may end up paying tax on money twice. Once at the corporate level and then again if you take that money in a later year as compensation or dividends from the corporation.
People sometimes choose to make an S-election. This allows for the income and expenses to "flow-through" to the shareholders. The income doesn't get taxed at the corporate level, only the shareholder level. Once the income tax is paid, the distribution can be made at a later date without paying income tax on it again. However, shareholders participating in the operation of the company are expected to take a reasonable salary, so there will be a certain amount of employment tax - social security and Medicare - that will have to be paid. This is usually a lower amount than taking it all as self-employment income as a sole-proprietor.
Here are some resources that may be worthwhile reviewing before making a decision:
Calculating your own Retirement Contribution
Limited Liability Companies and Taxes
S-Corp vs C-Corp
IRS entity declaration form for LLCs
What you need to know about SEP IRAs
Advantages of a SEP IRA
Hope this helps!
Cindy
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