dboreham parent
Ianaa (I do own an LLC, an S-corp and a C-corp doing software though), but this sounds fishy. Besides some details at the margin such as payroll taxes, tax treatment (how much tax $y is owed on revenue $x) should be roughly the same regardless of the legal entity type.
The accountant explained it this way: did money change "hands"?
If money went from the LLC into a "wage," it changed "hands." The IRS wants in on that.
If work went from the owner into an LLC, no money changed hands, and the IRS doesn't care.
But the very fact that people do S Corps shows that there is different tax treatment though.