Should Your Colorado Business Be an LLC or S-Corp? A Bookkeeper’s Perspective

Choosing the right business structure is one of the biggest decisions a Colorado entrepreneur can make. If you’re debating between an LLC and an S-Corp, it’s important to understand how each structure affects your bookkeeping, taxes, and long-term strategy.

Here’s a quick breakdown from a bookkeeper’s perspective:

LLC (Limited Liability Company)

• Simple structure and reporting requirements

• Profits and losses pass through to your personal return

• Minimal payroll setup required (especially for single-member LLCs)

• More flexibility for freelancers, startups, and solo operators

  
  

  Learn more about setting up an LLC in Colorado

S-Corp (S Corporation)

• Potential tax savings by splitting income between salary and dividends

• Requires running payroll for owners

• More complex bookkeeping and IRS compliance

• Ideal for businesses generating consistent profit

  
  

  IRS guide to S-Corporations

From a bookkeeping standpoint:

If you’re a Colorado small business owner making over $50,000 in net profit annually, it might be worth looking into the S-Corp option. However, it also means added responsibilities—like payroll setup and quarterly filings. Explore our payroll solutions.

Before making a switch, consult with a tax professional and review resources from the Colorado Secretary of State’s Business Division and Colorado SBDC. You might also consider reaching out to your local Colorado SCORE chapter for mentorship.

At Barmann Bookkeeping, we help business owners manage their books efficiently regardless of their structure. Whether you're just launching or scaling up, we can help you stay organized and tax-ready.

Need help deciding what's best for your business? Schedule a free consultation today.