LLC vs S Corp: Which Is Better for Your Assisted Living Business?
Aug 22, 2025
Starting an assisted living business is exciting—but it comes with lots of decisions. One of the biggest is figuring out your business structure. Should you go with an LLC or an S Corporation (S Corp)?
If you’re scratching your head over this, you’re not alone. This guide breaks down the basics so you can choose the best fit for your assisted living business. Let’s dive in! π
Check out this video, too:
Why Your Business Structure Matters
Choosing the right structure protects your personal assets and can save you money on taxes. But remember, every situation is unique! Always talk to an attorney and accountant about what’s best for your situation.
LLC Basics: Simple & Flexible
An LLC (Limited Liability Company) is a popular choice because it’s easy to set up and manage.
Here’s what you should know about LLCs:
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Flexible management and fewer formalities
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Pass-through taxation—business income passes directly to you
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You pay self-employment taxes on all profits
LLCs are great when you want simplicity and personal asset protection without complex rules.
S Corp Basics: Tax Savings for Growing Businesses
An S Corp isn’t a different type of entity (it's still essentially an LLC), but it's a different tax status you can elect for your LLC. It can (in certain situations) help save money on taxes if your business income is steady and high enough.
Here’s how S Corps work:
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Pass-through taxation with a twist—pay yourself a salary and take additional profits as distributions
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Salary is subject to self-employment taxes, distributions usually are not
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Requires more formalities and paperwork than LLCs
When Does S Corp Make Sense?
Let’s look at a simple example:
If your assisted living business pays you $100,000:
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As an LLC, with a 30% tax rate, you might pay around $30,000 in self-employment taxes on the whole amount.
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As an S Corp, you pay self-employment taxes on your salary (say $40,000) but pay less tax on the rest ($60,000 distributions), saving roughly $6,000.
That’s a simplified example, so make sure to talk with your accountant to see what is best for your scenario.
Asset Protection: Why It’s Critical
Both LLCs and S Corps protect your personal assets—your home, savings, and retirement accounts—from business liabilities.
In assisted living, this is key because accidents can happen. Keeping your business and personal assets separate protects you from lawsuits and financial risks.
Smart Tip: Use Multiple Entities to Protect & Grow
Many owners separate their real estate and business operations:
π One LLC owns the property
π’ Another LLC or S Corp runs the assisted living operations
π They sign a lease agreement between these entities
This separation adds protection and can help with tax strategies as your business grows.
Grab my free lease agreement template to help set this up.
Advanced Strategy: Holding Company Setup
As you expand, some owners create a parent holding company (LLC or S Corp) that owns all other entities.
This approach:
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Simplifies management
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Provides extra asset protection
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May offer tax advantages
This is a more complex setup, so get advice from your attorney and accountant before you implement this type of strategy.
What Should You Do Next?
There’s no one right answer for everyone. Your best choice depends on your income, growth plans, and personal goals.
Make sure you:
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Consult with an attorney and accountant
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Review your income and business goals
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Understand the tax and legal implications
How I Can Help You Launch Your Assisted Living Business
Feeling overwhelmed? Don’t worry—you don’t have to figure this out alone!
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Download your free Business Plan Checklist to get started
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Need help figuring out where to start? Join the next Roadmap Challenge and build your launch plan with me.
Got questions? Drop them in the comments below! β¬οΈ
Show full transcript π
Transcript
00:00:00
Today we're going to be talking about LLC's versus ESC corps. Which one's going to be best for your assisted living business. This actually came from a question that we got uh from somebody that uh was watching the channel um and the situation that they're in. And so I'm I'm hoping this can be really helpful um to to that person, but also to to those of you who are watching um and and needing some extra guidance here as as you're trying to figure out how to launch your assisted living business.
00:00:26
Um, I I love helping and coaching people and would love to help you. And uh, if you need some help and some guidance, make sure you go and grab our free business plan checklist. You can go grab that at assisted livinginvesting.net/bp checklist. Um, we have links down below. Uh, I've got uh we'll have the the kind of URL there for you to go and grab it as we go throughout the entire uh, video today. And if you are watching live, we're going to have time for some Q&A here at the end. So, make sure you're
00:00:52
typing in those questions. And if you couldn't make it live for whatever reason, uh then make sure that you are um typing in your questions in the comments so that we can uh get you the answers that you need to help you make some some progress towards launching your assistant living business. That's how this video was created. I think the one that we did last week was the same way. Um, I love getting in there and seeing what you need help with and helping you make that uh, you know, make
00:01:19
progress there. Uh, so that you can, you know, reach your goals, obtain obtain your goals of of of time and financial freedom for you, for your family, and what you're trying to what you're trying to achieve. Uh for those of you who are new here, let me dive over here and share my shift over to this screen right here. Um for those of you who are new uh and don't know me, my name is Brandon Gustafson. Um I own two uh assisted living facilities. I own and operate them. I do it out of state. I live in
00:01:53
Utah and I operate in uh Colorado and in Idaho. I've been doing this since 2020, so for quite a while. I also have a masters in healthcare administration. Um, so I' I've got a lot of experience in in the industry. Have been working in the industry in the healthcare industry since 2011. Um, so over a decade. Uh, have a master's in healthcare administration. Have done that for a while. Um, and I've also secured over $1.5 million in SBA funding. So, I understand that process and what it
00:02:22
takes to um to get to the point where you're you're really kind of making progress and and launching your um assisted living business. I love helping and coaching people. It is one of my favorite things to do. Uh so, would love to to help somebody like you. Go grab that free business plan checklist. Again, it's assisted livinginvesting.net/bvpch checkcklist. You can grab that. Um I am struggling trying Facebook used to have a way of letting me share these posts uh and put it in um but it's like changed
00:02:53
the the setting for making it public and I cannot figure out how to do it on the fly and it is bugging me. Um edit post. I think I'm going to have to do it after the fact and then maybe watch a YouTube video to figure out how to do it going forward. Used to be really simple to do. I'm struggling with it. Uh, so I apologize. Uh, anyways, let's get into this. Disclaimer, I am not an attorney. I'm not an accountant. So, I'm going to give you some advice here. Um, but this is based off of my personal experience.
00:03:26
This is not to be taken as legal advice or or anything of that sort. Please consult a professional for your specific situation. You need to do that. assisted living facilities need the right business structure um to help you save on taxes and protect your assets. And your situation is going to be different from mine. And so you need to be talking to professionals to understand exactly what that means for you. So please go and talk to professionals in your network. Hire the right people, talk to
00:03:56
them, and help them out. Okay, that's the disclaimer. I'm not an attorney nor an accountant. Go talk to one. Now, let's get into it. LLC's versus ESC cororbs. Um, I want to give you kind of a basic overview of this. And for those of you who are new here, type in newbie down below. I love seeing uh the new people that are watching the videos. Uh, and type your questions like where where you at in this process. Uh, what questions do you have as you're trying to figure out how to launch your
00:04:21
assisted living business? We'd love to hear from you. Um, now the basics here. LLC's um, they are flexible. um they have pass through taxation, meaning uh basically uh they they it's just money comes in and goes out and it goes directly through to you. So there's there's no real tax benefit to having an LLC. Um it it just passes through. That's what pass through taxation is at a really high level. I'm not an accountant. So um you know those accountants that are watching you go
00:04:50
ahead and correct me there if I'm wrong or you know give me thumbs up if if I'm right uh so that people uh know that this is the right thing to do. ESC corps on the other hand there's there's a tax status. So um there's pass through benefits with it but you are taxed as a corporation. uh those tax those tax rates um are going to be a little bit dependent on how much money you have coming into the business and what that uh how how it's functioning and and things like that. Um talk to an
00:05:19
accountant to figure out exactly for your situation if it makes sense to turn into an escorp or not with the understanding that once you become an escorp, you cannot change. And I I think I'm going to hit on that a little bit later. Um but you can't go back to being just an LLC. And so you have to be a little bit careful here when it comes to how um h how you want your entity to be set up because once you go escorp, you cannot go back. Um with LLC's, something that's nice is there are fewer
00:05:50
formalities. Um you can create LLC's all day long. Like they're they're very easy to set up. Uh they're pretty easy to maintain. Uh there there's not a lot of formalities with it. Whereas with an escorp, there's shareholders and um you typically have like a hundred shares. Um you can split those up and in different ways and and things like that. There's there's ways around it. Um but typically you're going to have shareholders rather than just like percentage of ownership
00:06:19
um that you might see with an LLC. The nice thing about both of these though is they do protect your personal assets. you're putting things into entities and part of an escorp is actually my understanding is it's an LLC with an escorp election um which is a tax uh which is a tax status so it still functions as an LLC from an asset protection standpoint um and and so if if you treat it correctly you don't pierce the corporate veil you keep things inside of your entities you're going to be protected um which is
00:06:51
something that is really good and valuable and why you should be having an entity. I'm not an attorney, but I highly suggest that you consider becoming an entity with your assisted living facilities and treating it like an entity because then it can protect your personal assets if a resident were to fall or um something happened uh within the operations or to the house or something like that. It protects your personal assets, which is something that you want to be doing uh because we live in a very ligious society and you don't
00:07:19
want somebody suing you and then getting access to your personal house um or your personal assets, your retirement account and those types of things. You want to keep them separate and so having that set up under entities is is something you want to be doing. Now, the type of of entity and uh tax benefits and all those things, those are very specific to your situation. LLC's at at their core are simple and they're flexible while escorps offer some tax perks um but also payments um and they do require a little
00:07:49
bit more structure. So that's that's the basics of LLC's and escorps. Some advantages and disadvantages of each of these. So an LLC easy to set up, flexible management, very very simple to to work with, very flexible. Um self-employment taxes are going to still apply. This is where you might really consider getting into the escorp because um it can save you some money on those employment taxes. When it comes to escort, there are so I follow a guy, his name is Mark J. Coler. I actually work
00:08:20
with his firm um as my attorneys. I used to work with his um with his accountant group which was called Coler and Air, but they broke up um about a year and a half ago. And so I use one of his former accountants for as my accountant. Um but Mark J. er, he has some incredible videos on this. Um, and and he has a kind of a threshold and and explains this. Um, so in a nutshell, I'm going to very much oversimplify. Encourage you to go talk to talk to a professional. Go watch some of Mark's uh videos. Um, but
00:08:50
you you figure out what the amount is. Let's say that it's $40,000. If you have $40,000 coming in in consistent income, at that point it probably is going to make sense, depending on your situation, to shift over into an escorp so that you can save on some of the self-employment taxes. Because if you have uh basically how it works is self-employment taxes, let's just say they're 30%, because I don't know all of the the tax rules. Uh, but if you're you're getting a $100,000
00:09:17
in um in in income and you're just an LLC, all of that is going to be self-employment. Okay? So, you are paying 30% of that. You're paying $30,000 in taxes off of that 100,000. Now, if you turn yourself into an an escorp, you're going to be paying um some some portion of that is going to be self-employment taxes, but the other portion of it is going to be um corporate taxes. Um for I might be off a little bit on on what this is called, and they have different ratios. So, let's say that your corporate tax is at
00:09:51
20%. And your self-employment tax is going to stay at um at 30%. I've not done the math for this, so I'm Let's see if it works. Um, so let's say you pay yourself $40,000 of that $100,000. 40,000 uh you're going to tax that at 30%. And that number is going to be uh for $12,000 $12,000 in taxes uh right there. And then the remaining $60,000 that you have um is going to be charged at at 20%. Again, just round numbers to make this really easy. probably not a real example, but you are making $60,000
00:10:29
uh from corporate, you've got to pay 20% tax on that. That is going to be another $12,000. So total right there, that's $24,000 in taxes, which seems like a lot, but when you compare it to the 30,000 you are going to be paying, you're going to save yourself about $6,000. And a very oversimplified example of how uh the different tax benefits can work depending on if you are an escorp or an LLC. And so you have to kind of understand exactly what that's going to look like for you as as
00:10:59
you get into this. And I hope I did the math right there. Uh if I did, like give me a huge thumbs up because that was totally on the fly in my brain and did not look at that previously. If I didn't, then still give me a thumbs up and like say you're good at math still. It's okay. Uh give me some encouraging words. Um, but you want to understand what that's going to look like for you because it's it's really hard to uh to say just a blanket statement, yep, you should turn into an escorp because
00:11:26
there's benefits for it. You need to look at it on a situation by situation basis uh as you get into this because you know, like I mentioned, you cannot revert back to an LLC um without like paying extra taxes or or just like a bunch of extra paperwork and you don't want to do that. It's going to be very costly. Uh, so you you want you don't want to once you turn into an escorp, you want to make sure that it's going to be that for the long term. You don't want to say, "Oh, cool. I had a good
00:11:54
year. Um, and so I'm now going to turn myself into an escorp because I think I hope that that I'm going to continue to have good years." when it might be best to show that you have some consistency. Uh you have a track record for having good consistent years before you turn yourself into an escorp. Um those are decisions that you want to have with your with your accountant uh to make sure that it makes sense. And then when you do that change, work with your attorney to make sure that you are
00:12:24
doing it correctly, that you are setting up all of the minutes correctly, that everything works the way that you want it to be. So, escorps can save you some money, but LLC's are going to be simpler. Um, that's like the the big advantages and disadvantages of of the two entity types. You need to figure out for your specific situation, excuse me, what that's going to look like um so that you understand uh how that's going to impact you and the way that you're functioning as business. So, hopefully
00:12:52
that makes sense. Um, it is hard for me if you were to ask me like this, this person that uh reached out uh I can't remember if it was on a Facebook post or YouTube comment or an email uh one of those ways they reached out and said, you know, my my brother-in-law's friend is an accountant and said I should absolutely turn into an escorp. that may be the case, but without like looking at the numbers and understanding exactly what your situation is going to look like, it's hard for me to just make a
00:13:19
blanket statement and say, "Yes, you 100% should be turning yourself into an escorp because it's not that cut and dry. It is uh each situation needs to be looked at on an individual basis before you can um say yes or no. Um this is how I how I need to be structuring my entities." Okay. Now, let's look at multiple entity strategies. Um, so, and I I I want to acknowledge really quick, I'm I'm digging into this. I love this stuff. I love getting into accounting and and uh and and legal stuff. Like, it
00:13:51
to me it's fascinating. I understand it can be a little bit dry. So, um hopefully like if you're sticking with me, um thank you and like the video, uh because I want this to be really helpful to people to understand how it's going to benefit you as you get into this uh as specifically as you're trying to set this up for your entities and figure out what's going to be best for you. It's a hard decision. So, I want you to understand that um you know, you should get professional guidance. Um but I'm
00:14:17
hoping that I can give you a little bit of guidance there and help you out with this. Now, multiple entity strategy. Um, this is similar to the way that I structure things, and this is something I've learned from Mark Kohler, um, and and other attorneys that I've looked at. Um, so having an LLC, uh, a real estate LLC can help protect your assets. So, you have an LLC that owns real estate. You have an LLC that owns the operational business. You have a lease that is set up. I actually have an a a a
00:14:47
tool that you can go grab on my excuse me that you can go grab on my website assistedlivinginvesting.net/lease-aggreement and it will give you my free lease agreement template. Um that is the the template that I've used to set up a lease agreement between my real estate entity and my operational entity. Keeps those things separate. Now, uh, in smaller residential facilities, there's not a lot of, um, real estate, uh, tax benefits, but there is a longer term strategy, especially as you grow your
00:15:18
portfolio, to having these things in different, um, locations as well from a taxation standpoint, uh, having real estate in in in different entities and things like that. So, it's another thing that you want to be aware of. There's a lot of really cool strategies you can get into with this. um operating an having an operating escorp that runs the business. So this is where let's say that I have an escorp. Let's on this on this slide here I've got a green uh escorp. Um and then I have LLC's that
00:15:48
that green escorp owns portions of. So I invest with my dad. I own 50% of our operating entity. I own 50% of our real estate. Um but it's not me that owns it. It's my escorp. Uh, and so, um, I have, uh, that that entity, uh, or LLC, whatever it is that that you need it to be. Um, that entity is what owns the portions of those things. And then the LLC's um, that that own the real estate and that own the operational business, they are passed through taxation. So, everything just flows up into that that
00:16:24
holding company, the in this in this picture, the green one there, that that holds that. Um, and so that's something that that's a that's a strategy that you can look at. It helps protect your assets, helps protect you, and there can also be some tax benefits uh when you do that. Uh, it can be an LLC or can be an escorp um at at that that top level. Um, these are things these are a little bit more advanced. Um, so you want to be talking to your accountant, to your attorney to figure out if this is a good
00:16:52
um option for you u to be doing that. But it's something that you you might want to consider as you get into this world of doing things. So would I turn if I have an operational entity? Uh would I turn that into an escorp? I don't know. I I I would need to have a conversation. Or would I turn my holding company into an escorp? I don't know. It's a conversation I want to have. Uh what what what about the one that owns the real estate? Should I be doing that? Like there's there's so many
00:17:19
there's there's a lot of complexity to this and each situation is going to look different. Talk to an attorney, talk to an accountant, ask them what you should do for your specific situation. Um, this can also, the other advantage here of having these multiple entities is it can shield your property, the real estate from the operational business. So, not only is it doing it for your personal assets, but uh say you have have a a house and a resident falls. Now, is that the the fault of the operational
00:17:50
business? Is it the fault of the real estate? Um that that's a question for the insurance. Um but if they are separate then if it was the fault of the operational business then that they can't touch the equity in the house. If it was the fault of of the real estate and there's no equity in the house they can't go after the business and try to suck out funds there. So there's some extra strategies and complexities to adding when you do this and it adds some protection to you uh which makes it uh
00:18:20
when you have somebody that's trying to go after you from a legal sense uh in our latigious society uh it's it's confusing. There's a lot of stuff involved and and sometimes it's easier for them to either um settle outside of court or uh to just retract um what they were saying because nothing that bad actually happened. And so you need to be looking at those uh and taking all of that into consideration as well as you get into this. Your situation is going to be different from mine. Consult with a professional.
00:18:52
Make sure you have this thing set up correctly. It's very important. I know it's costly working with attorneys. It can cost money. Um they charge you hourly and and really like quarter hour, sometimes even more than that. Uh you know, every five, eight, 10 minutes. Like they will charge you um a lot of money. But um it can save you in bad situations can save you literally hundreds of thousands of dollars and it is worth spending some time working with attorneys to make sure you get things
00:19:22
set up correctly in a way that's going to benefit and protect you um the the right way. Now let's talk about the advanced kind of parent entity. Um and I've kind of alluded to this. You have a parent escorp um or an LLC. They own all of the subsidiaries. This simplifies management and scaling. Uh so right here the red dot um can can have a party to all kinds of opportunities, all kinds of deals. There's some potential tax savings uh with the way that you do this. Maybe that red entity there here
00:19:50
on this slide. Uh for those that are listening on the podcast, there's there's a red dot and then there's a bunch of black dots underneath it. Um so um the the red dot um that's up above. It can be the one that uh can provide you with some potential tax savings. Maybe that's the escortp. um maybe or it can be an LLC and and then you have money coming up through it. There's a lot of different strategies here. Um this can be very complex. Again, needs professional help. Uh so I can't stress
00:20:19
that enough. Make sure you're talking with an attorney. Make sure you're are working with an accountant. Make sure you understand the situation that is most beneficial to you because that if you change to an escorp is a permanent slection. And so you need to understand what that's going to do to you from a asset protection standpoint. Should be fine, but you want to understand it. And you also want to understand what that's going to do from for you from a taxation standpoint as well because once you turn
00:20:47
that red dot into an escorp, it it it's going to stay that way. And so if you those other black dots, if you um take those and and you decide to dissolve them and all of a sudden you're not getting the money coming up to an escorp, you're probably going to end up paying more in taxes than you would be saving. So you just want to understand exactly how this is going to work for you. I love the parent entity um type of of methodology. I think it's great. Uh it's something that I use, but you want
00:21:13
to understand how it's going to impact you. Uh, and these are conversations you need to be having for your specific situation uh with an attorney. Now, again, your situation LLC to escorp uh to answer the question that uh that are that our viewer had here, an escorp may save you on taxes. This is possible. This is certainly possible. Um, but you want to understand what that looks like. Um, you need to check your profits. You need to understand the shareholder rules. Um, conversion is one way, uh,
00:21:46
but it can be complex. Um, you need to consult with an accountant to check for tax savings. Is it really going to save you because you're probably going to end up paying a little bit more in taxes to do that, especially the year that you make the change. So, you want to understand what that's going to look like. Um, my ALI basics course, um, this is something that I can help you out with. If you're if you're having questions you you don't know how to go and ask a an attorney like what
00:22:10
questions to ask, I can help you and provide you with some guidance there. So, go check us out at assistedlivinginvesting.net/basics. It's our it's the easiest way to work from me uh work with me and and for me to help you out as you're trying to to make progress. We have monthly member onlyly Q&A calls. We actually have one this Thursday morning. So, if you were to join here in the next day and a half, you can join us there and you get access to me. Those are recorded. They're
00:22:37
member only. We get deep into conversations. They typically last 60 to 90 minutes. I have a lot of fun with them um and and interacting with people. So, um yeah, just a quick plug like if you want to jump into it, we're doing one this Thursday. So, get into ALI basics here in the next day and a half and you can join us for that. Um you get priority answers when we do our YouTube and Facebook lives uh like this one. Um, sometimes we have drier topics like this, LLC's versus ESC corps and not a
00:23:04
lot of people are jumping on because uh it's not that exciting, but other times we have 20 people in these calls and it's hard for me to get to all of the questions and so you get priority um when when we're talking through things, free resources, webinar recordings, Q&A recordings, uh you get a bunch of extra things there inside of our AI basics community. I would love to have you there. Um I love coaching people. It's one of my favorite things to do. So, uh, go check us out, assisted
00:23:28
livinginvesting.net/basics. Um, and and hop in and join us. I think there's a promo code there, um, for you on the site. So, uh, assisted livinginvesting.net/basics. Go check us out. Um, so with that, I'm going to hop over and see if we have any questions. U,, it looks like we don't. Um, like I mentioned, this is a little bit of a dry topic. I get it. But I also know that there is somebody out there at some point that is going to find this and this is going to be their favorite video that I've ever done on the channel
00:23:56
because it's going to help them clarify things. So if that is you, make sure you like the video, subscribe, and ring the bell because I put out content like this two times a week. We go live on Tuesdays. We put out content on Thursdays as well. We put out a bunch of stuff on our different social media feeds. I love helping and coaching people and I would love to help you out uh as you are going through the process. So make sure you do all those things. Make sure you um are integrated in our
00:24:20
ecosystem and go check out ALI basics at assisted livinginvesting.net/basics. Does residential assisted living sound interesting to you, but you don't know how to get started? At assisted living investing, I'm here to help beginners like you launch their assisted living business in the next 12 months. I love helping and coaching people. It is one of my favorite things to do. I'd love to do that for you. Go check us out at assistedlivinginvesting.net. And remember, doesn't take a lot, just a
00:24:44
little bit. Just keep going step by step by step. And I promise you, if you do and you're consistent and persistent, you are going to be successful. Thanks for watching and have a great day.
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