If you’re a creator on OnlyFans, Patreon, or other platforms, the way your business is taxed directly impacts your take-home. Too many advisors default to filing your income on a Schedule C — which triggers self-employment tax on top of income tax. The result? A painful tax bill and mandatory estimated payments going forward.
Real example: A creator earned $170,000 in 2024. Another advisor filed them as a Schedule C sole proprietor.
Their tax outcome:
- Self-employment tax (15.3% on ~$170K): ≈ $26,000
- Federal income tax (after standard deduction): ≈ $14,000
- Total tax due: ≈ $40,000
And because the balance due was so large, they were also hit with the requirement to make quarterly estimated tax payments going forward.
How S Corp status changes the picture
Had the creator elected to be taxed as an S Corporation, the tax treatment would have been different:
- A reasonable salary (say $60,000) would be subject to payroll taxes (≈ $9,000).
- The remaining profit (~$110,000) would not be subject to self-employment tax.
- Income tax still applies, but the savings on self-employment tax alone could be $15,000–$18,000.
That’s money back in your pocket, simply by choosing the right entity election.
Penalties and interest if you wait
Because this return was already filed as a Schedule C, we had to do a late S Corp election. Waiting adds penalties and interest:
- Late S Corp return (Form 1120-S): $220 per shareholder, per month, up to 12 months.
Example: 1 shareholder, 4 months late = $880 penalty.
- Late payroll reports (Form 941/940): Penalties range 5–25% of tax owed.
Example: $10,000 payroll tax filed 2 months late = $500 penalty + interest.
- Failure to make estimated payments: IRS underpayment penalty ~6–8% annually.
Example: $40,000 balance due with no estimated tax = $2,400–$3,200 penalty.
- IRS interest: ~8% annually, compounded daily.
Pro move: Every month of delay adds fixed penalties. Every quarter missed adds estimated tax penalties. Every day adds interest. If you owe $40,000 now, waiting could easily push that above $45,000.
Schedule C vs S Corp on $170K
| Scenario |
Self-Employment/Payroll Tax |
Income Tax |
Total Approx. Tax |
| Schedule C ($170K net income) |
$26,000 |
$14,000 |
$40,000 |
| S Corp ($60K salary + $110K profit) |
$9,000 |
$14,000 |
$23,000 |
The bottom line
On $170K of income, filing as a Schedule C could leave you with a $40K+ bill. Filing as an S Corp could reduce that by $15K–$18K. But you can’t wait: late elections and late payroll reports stack penalties and interest fast.
Creator tip: Don’t let the IRS take more than they should. If you’ve already filed, act immediately — every month late means more penalties, and every quarter late means more estimated tax fines.