What Are The Tax Benefits of an Limited Liability Company (LLC)?

What Are the Tax Benefits of a Limited Liability Company (LLC)?

When people are starting a business, it’s likely that they’ll consider the tax benefits of different company structures. In some cases, founders may create a limited liability company (LLC) specifically for its tax benefits.

Here, we’ll delve into the tax benefits of LLCs for business owners, as well as other pros and cons.

Key Points

•   LLCs offer flexibility in choosing tax classification, such as sole proprietorship or partnership.

•   Pass-through taxation allows LLC income to be taxed once at the individual level, avoiding corporate taxes.

•   Members report income and losses on personal tax returns, potentially lowering overall tax liability.

•   LLCs can opt for S-Corp taxation, retaining pass-through benefits while potentially reducing self-employment taxes.

•   Tax benefits vary by state, so consulting a tax professional is recommended for specific advantages.

💡 Recommended: How To Incorporate

What Is an LLC?

An LLC is a type of business structure available in the United States. A kind of hybrid, it combines some characteristics of corporations with others from a partnership or sole proprietorship.

According to the IRS, LLC owners are called “members.” Depending on the state in which you set up the LLC, members may be individual people, other LLCs, or corporations. There is no maximum number of members that a company can have, and most states allow LLCs with just one member. Check your state for specifics.

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Recommended: Pros and Cons of LLCs

Tax Benefits of Forming an LLC

As mentioned above, company founders may choose an LLC structure especially for its tax benefits. Here, we go into detail about what those benefits are.

Limited Liability

An LLC, as its full name implies, provides limited liability to its members. This means that, if the company fails, the owners’ and investors’ private assets are not at risk and can’t be seized to repay company debts.

Flexible Membership

As noted previously, an LLC can have one member or many, and those members can be individuals or companies. This business structure gives owners significant freedom when starting their company.

Management Structure Options

LLCs can be managed by a member (owner) or by a hired manager. A member-managed LLC may be chosen if the company has limited resources or few members. An owner may select a member with management experience to oversee the business, or they may want all members to actively participate in the company’s operations.

A hired manager is someone who is not a member but has the appropriate experience and skill sets to run the LLC. An accountant or financial advisor can go into detail about the tax benefits of member-manager vs. hired manager approaches. (Here’s what to know if you’re filing taxes for the first time.)

Pass-Through Taxation

LLC member-owners have some control over how their business will be taxed. If there is only one member, it will automatically be treated like a sole proprietorship, and if there is more than one, like a partnership. In those cases, business income will pass through the business to the member-owners, and they’ll only get taxed once. Members will report income and losses on their personal tax returns, while the LLC itself is not taxed. (Learn how business income differs from other types of income.)

Because income and losses are reported as part of members’ personal financial pictures at tax time, taxes will be owed at each member’s personal tax rate.

Alternatively, the LLC owners may decide to be taxed as a corporation. If they choose an S-Corp structure, pass-through taxation still applies.

Recommended: How Long Does It Take Taxes to Come Back?

Heightened Credibility

When someone opens an LLC, it shows that they’ve gone beyond just hanging a shingle. Instead, they went through the decision making and paper filing processes involved in setting up the LLC.

Limited Compliance Requirements

According to the U.S. Small Business Association (SBA), another form of business structure — the corporation — has the strictest requirements. In contrast, LLCs have some but fewer.

In general, an LLC should maintain a current operating agreement, hold annual meetings, ensure that they have appropriate shares recorded for each member, and keep records if membership interests transfer. (Find out if you can use a personal checking account for your business.)

Recommended: How To Form an LLC in Georgia

Disadvantages of Creating an LLC

So far, the LLC sounds like the ideal low-maintenance company structure. However, there are several caveats to be aware of.

Cost

Forming an LLC can cost a few hundred dollars, which may be more than what a small business wants to spend. (An online budget planner can help business owners set budgets and track spending.) The company will also need to file annual reports along with annual fees and taxes. These taxes and fees may cost a miniscule amount or several hundred dollars annually.

No Stock Ownership

When a corporation wants to raise funds, they sometimes issue shares of stock. An LLC cannot issue stock.

Recommended: How to Start Investing in Stocks

Transferable Ownership

Some states may require that an LLC be dissolved if there is a change in ownership. If the people starting the business expect to take in outside investors over the years, a corporation might be a better choice.

How to Form an LLC

Once you’ve decided to start an LLC, you’ll want to choose and reserve a company name that doesn’t conflict with currently existing ones. Typically, an LLC must have what’s called a registered agent — someone who will handle official documents for the company.

Then, you’ll need to document the nuts and bolts of the operating agreement that describes the structure of the company. This can include who owns what portion of the company and who gets to vote on which issues. You’ll detail how profits and losses will be addressed, how the company will be managed, when meetings will be held, and how to handle the business if a member leaves the company or dies. This document should also describe what should happen if the company goes out of business.

How LLCs Are Different From Other Business Entities

An LLC is formed to be a legal entity that’s separate from its owners and is responsible for its business debts. Here’s how an LLC differs from other company structures.

LLC vs Sole Proprietorship

Profits in an LLC are only taxed once because of the pass-through taxation structure. This is reported on and addressed through owners’ personal tax returns by filing a Form 1040, Schedule C, listing profits or losses. As an LLC owner, you may be taxed as a sole proprietor, a partnership, or a corporation.

A sole proprietorship is owned by one person and is the simplest structure available. A sole proprietorship also involves pass-through taxation with the business owner paying taxes on the business’s profit. There isn’t as much flexibility in filing as a sole proprietor as there is with an LLC.

LLC vs S-Corp

An LLC is a business structure. An S-corp, meanwhile, is a tax classification. Many businesses decide to have their LLC taxed as an S-corp. The nuances can be complicated, so it makes sense to consult your personal accountant or other professional before making this decision.

LLC for Rental Property

If you create an LLC to buy rental homes, you’ll have the benefits of no personal liability and pass-through taxation. There can be a flexible ownership structure, personal anonymity, and fairly simple reporting.

However, it may be harder to finance rental property as an LLC. There can also be significant fees to get the LLC up and running. LLCs for rentals can be more complex at tax time, and property transfers can also be more complicated.

Recommended: What Is a Professional Limited Liability Company?

How to Choose the Right Business Type

Consider how simple or complex your proposed business will become. Do you plan to basically run the business yourself, or will it ideally turn into something bigger? What kind of legal protections will you need based on your business plans?

Entrepreneurs should also weigh the tax benefits of LLCs and sole proprietorships. The two structures, along with partnerships and S-corps, feature pass-through benefits, meaning that profits are taxed only when they’re paid to the company owner(s). A C-corp, meanwhile, is taxed as a company as well as when shareholder payouts are made.

Consult your accountant or financial advisor for specifics on your situation.

No matter what business structure you choose, it’s important to keep track of your finances. SoFi’s spending app provides you with an easy-to-use online budget planner so you can stay on top of your finances.

The Takeaway

Limited liability companies (LLCs) come with plenty of advantages and a few disadvantages. As its name implies, the owners’ and investors’ private assets are not at risk if the company should struggle financially. Owners of the LLC are referred to as members. Membership may range from one individual to multiple individuals to other companies.

A major benefit is pass-through taxation, where income passes through the company to its members, who report it on their personal taxes. One disadvantage of LLCs for very small businesses is the startup cost and annual fees, which can run to several hundred dollars a year. Consult a professional to find out whether an LLC is the right fit for your business plan.

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FAQ

What are the tax benefits of having an LLC?

With an LLC, you’ll have flexibility in deciding the structure under which your company will be taxed. There are more tax benefits of an LLC, including pass-through taxation, which means you’ll only get taxed once at your individual tax rate.

What are the benefits of a limited liability company?

They can include limited liability, meaning that owners aren’t personally responsible for company debts; flexible structures; pass-through taxation; more credibility; and fewer compliance requirements compared to a corporation.

What is the best tax option for an LLC?

Each situation is unique, so consult your accountant or financial advisor for specifics.


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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Explaining Student Loan Forgiveness For Teachers

There are several options for teachers seeking to reduce their federal student loan debt, including loan forgiveness and cancellation. For example, teachers may qualify for the Teacher Loan Forgiveness program, Public Service Loan Forgiveness (PSLF) program, and/or Perkins Loan Cancellation for Teachers. Also, there are state and local loan forgiveness, cancellation, and grant programs. We’ll discuss these options in more depth below.

Key Points

•   Teachers with federal student loans may qualify for several student loan forgiveness programs, including the Teacher Loan Forgiveness, PSLF, and Perkins Loan Cancellation programs.

•   The Teacher Loan Forgiveness program offers up to $5,000 or $17,500 after five consecutive years of teaching at a qualifying school.

•   Some states and local organizations offer additional loan forgiveness or grant programs for teachers.

•   Private student loans aren’t eligible for federal forgiveness, but refinancing can help reduce interest rates or monthly payments.

•   Not all programs can be used concurrently, so it’s important to choose the option that best aligns with your eligibility.

Teacher Loan Forgiveness Program

Amount Forgiven

Up to $5,000 or up to $17,500 of the loan may be forgiven, depending on the subject area you teach.

Which Loans Might Qualify

Direct (or Stafford) Loans, both subsidized and unsubsidized, and Federal Family Education Loan (or FFEL) Program loans qualify for this program. For borrowers with Direct Consolidation Loans, the outstanding portion of the consolidation loan that repaid an eligible Direct Subsidized Loan, Direct Unsubsidized Loan, Subsidized Federal Stafford Loan, or Unsubsidized Federal Stafford Loan may qualify for Teacher Loan Forgiveness as well.

Qualifications

•   Must teach at a low-income school — you can search for a school in this directory

•   Must teach for five complete and consecutive academic years

•   Existing student loans can’t be in default

Details

The maximum amount that can be forgiven under this program depends on the role and subject the borrower teaches. Teachers are eligible to receive up to $17,500 if they’re considered “highly qualified,” as defined by the program, and are full-time math or science teachers who have taught in an eligible secondary school. Teachers working in special education who meet specific requirements may also qualify to have $17,500 forgiven.

Teachers are eligible to receive up to $5,000 if they are a “highly qualified” full-time elementary teacher or a full-time secondary school teacher in all other subject areas.

What does “highly qualified” mean? It means that the borrower has a bachelor’s degree, full state certification as a teacher, and their certification or licensure requirements weren’t waived on an emergency, temporary, or provisional basis.

If you apply for Teacher Loan Forgiveness, you can’t also apply for PSLF for the same period. So, if you receive Teacher Loan Forgiveness, the five-year period of service that supported your eligibility won’t count toward PSLF.

How to Apply

Teachers aren’t eligible to apply until they have completed five years of service. After completing this requirement, borrowers can fill out a Teacher Loan Forgiveness Application. (It may be helpful to get acquainted with the application now, because it clearly explains who qualifies for what amount of forgiveness.)

💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

Public Service Loan Forgiveness Program

Amount Forgiven

The PSLF program forgives all of the remaining loan balance.

Which Loans Might Qualify

Direct Loans and Direct Consolidation Loans qualify for this program.

Qualifications,

•   Must be in certain public sector jobs and employed full-time

•   Must have made 120 qualifying payments (this takes 10 years if the borrower makes them consecutively)

•   Payments must be made as part of an income-driven repayment plan

•   Existing student loans can’t be in default

Details

Unlike with the Teacher Loan Forgiveness program, teachers don’t need to teach for a low-income school or within a particular academic subject when applying for the PSLF program.

To be eligible for this program, the borrower must be employed by the local, state, or federal government or work for certain nonprofit organizations that provide a qualifying public service — such as general education services.

To qualify for PSLF, borrowers must be on a qualifying payment plan, such as an income-driven repayment plan. With an income-driven repayment plan, borrowers are only required to pay a certain percentage (between 10% and 20%) of their discretionary income toward their monthly student loan payments.

Recommended: A Look Into the Public Service Loan Forgiveness Program

Sometimes, there’s confusion about whether forgiven loan balances are taxed. If a borrower meets the qualifications for PSLF, the forgiven amount won’t be taxed. For borrowers who are on an income-driven repayment plan and expect their loans to be forgiven after 20 or 25 years (but aren’t participating in the PSLF program), it’s possible that the forgiven amount will be taxed as income. To understand more about these tax nuances, consult a licensed tax advisor.

To qualify for PSLF, the 120 qualifying monthly payments don’t need to be consecutive. For example, if a borrower has a period of employment with a non-qualifying employer, they won’t lose credit for any prior qualifying payments made with a PSLF-approved employer.

While it’s possible to partake in both the Teacher Loan Forgiveness Program and PSLF, it’s not possible to do so concurrently. Your five years of service under the Teacher Loan Forgiveness Program don’t count toward your qualification for PSLF — you’ll have to qualify for PSLF under a different period of teaching service. Furthermore, payments made when working toward the Teacher Loan Cancellation Program won’t qualify for PSLF — you’ll have to make 120 additional qualifying payments for the PSLF program.

How to Apply

Borrowers may want to fill out the PSLF form with the PSLF Help Tool to be certain that their employment qualifies for the program. Once received by the Department of Education (ED), the borrower will receive a response telling them whether or not they qualify and, if they don’t, what steps are needed to become eligible. If the borrower does qualify, the ED will tell them how many qualifying payments have already been made.

Every time a borrower changes jobs, they’re advised to send in an updated PSLF form. Otherwise, borrowers will be required to submit a PSLF form for each of their previous employers when they apply for forgiveness.

Once a borrower has received notification that their PSLF form has been approved, they’ll need to continue making those on-time student loan payments. After making 120 payments, they can apply for forgiveness.

Perkins Loans Cancellation for Teachers

Amount Forgiven

Up to 100% of the loan may be forgiven in increments over a five-year period.

Which Loans Might Qualify

Federal Perkins Loans are eligible for this program. The Federal Perkins Loan program expired in September 2017, but loans disbursed through the program may still qualify.

Qualifications

Applicants must have a minimum of one year of teaching and at least one of the following requirements:

•   Teach at a low-income school — search for a school in this directory

•   Teach in a teacher shortage area, such as science, math, foreign languages, bilingual studies, or any other field of expertise considered to be a teacher shortage area by your state

•   Teach special education, meeting certain qualifications

Details

Those who are eligible for the Perkins Loans Cancellation for Teachers may have all of their Perkins Loans forgiven. Cancellation happens in stair-step increments over five years. Here’s how the incremental forgiveness system works:

•   15% of the original Perkins loan balance is canceled per year for the first and second years of service

•   20% is canceled in both the third and fourth years

•   30% is canceled in the fifth year

In order to qualify for this program, an employee must work directly for the school system — qualifying is entirely contingent on position duties.

How to Apply

Each school has its own process, so borrowers should contact the school that administered the Perkins Loan.

State and Local Student Loan Forgiveness Programs

Some states offer loan forgiveness programs for teachers, especially for those who work in subject areas in high demand. One place to start your search for a state and local teacher loan forgiveness program is through this database created by the American Federation of Teachers.

What About My Other Student Loans?

So far, all of the programs we’ve discussed only apply to federal loans. What can be done if a borrower has other loans (such as private loans) that don’t qualify for federal teacher loan forgiveness? One option is to look into refinancing the student loans.

When a borrower refinances a student loan or multiple loans, they’re essentially paying those loans off with a new loan from a new lender. Ideally, the new loan has a more competitive interest rate than the existing loan(s), which could potentially save the borrower money over the life of the loan.

Borrowers can refinance both private and federal student loans, so this may be an option for teachers who don’t qualify for one of the federal forgiveness or cancellation programs.

If you refinance your federal loans, you’ll lose access to federal loan benefits such as access to the PSLF program and the Teacher Loan Forgiveness program. There’s always the option to refinance your private loans while keeping your federal loans separate.

The Takeaway

Teachers with federal student loans may be able to pursue loan forgiveness through programs such as the Teacher Loan Forgiveness and PSLF programs. Borrowers who hold Perkins Loans may also be able to pursue Perkins Loan Cancellation for Teachers. If you also have private loans, refinancing may be a good option, though, as stated above, refinancing federal loans disqualifies borrowers from government forgiveness programs.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.


With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Can teachers qualify for both Teacher Loan Forgiveness and Public Service Loan Forgiveness?

Yes, but not for the same period of service. Time used to qualify for Teacher Loan Forgiveness doesn’t count toward the Public Service Loan Forgiveness (PSLF) program, so borrowers must meet each program’s requirements separately.

Do teachers need to work at a low-income school to qualify?

Teachers must work at a qualifying low-income school to be eligible for the Teacher Loan Forgiveness program. However, this isn’t necessary to qualify for the PSLF program, as long as the employer qualifies as a public service organization.

Are private student loans eligible for federal loan forgiveness?

Federal forgiveness programs only apply to federal student loans. Private loans aren’t eligible, but you might consider refinancing your private student loans, as you may be able to secure a lower interest rate to reduce your monthly payments.


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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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3 Ways to Support Your Employees During Times of Uncertainty

Benefits professionals play a critical role in leading their teams through periods of uncertainty. Whether driven by economic shifts, political/regulatory changes, or a global crisis, uncertain times can heighten employee stress, reduce morale, and impact productivity. Now more than ever, workers look to their employers for stability, empathy, and meaningful support. For HR pros, this presents a unique opportunity to strengthen employee trust, promote well-being, and reinforce organizational stability.

Supporting employees during challenging periods generally requires more than just maintaining current benefits; it often calls for thoughtful adjustments, clear communication, and a focus on mental, emotional, and financial health. What follows are three actionable ways benefits pros can meet the moment and help employees feel valued and secure even when the future feels unclear.

Key Points

•   During uncertain times, employees often turn to their employers for reassurance and support.

•   Provide clear, helpful, and compassionate communication to reduce stress and confusion.

•   Use multiple communication channels to ensure all employees receive vital information.

•   Review and offer voluntary benefits to address employees’ diverse needs.

•   Consider financial wellness benefits that help workers manage short-term needs without sacrificing long-term security.

1. Make Sure Communications Are Honest and Accurate — and That They Reach Everyone

During uncertain times, it’s important to remain as open and transparent as possible with your team. This helps normalize what employees may be feeling and fosters a supportive environment where workers feel connected and reassured, even if the future is unpredictable.

Be Honest

Research indicates that employees engage more if they think company communications are honest. That means it’s OK to tell employees management is still looking into a change or isn’t sure exactly when a new policy will be implemented. In uncertain times, it’s better to keep in touch. Employees are looking to you for leadership, but they also want to be in on the process when changes are taking place. What’s more, giving employees honest updates can avoid the need for damage control later.

Be the Voice of Reason and Compassion

Your employees are likely overloaded with news and information, some of which may be contradictory and confusing. It’s important that your communications stay on top of breaking news and add a clear, helpful, and understanding voice to the discussion when events impact the company, the employees, and benefits.

Recommended: How Financial and Mental Health Can Collide With Work

Take a Multi-Channel Approach

While internal email remains the most common way to communicate with employees, you also want to use mobile and social media to help ensure that all workers see vital communications no matter where they are or what their work situation may be. This will be, literally, reaching out to your employees where they are.

Recommended: Benefits of Working From Home for Employees

2. Review Your Voluntary Benefits

In times of uncertainty, employees may look to their employer for a shoulder to lean on. Many HR professionals recognized this during the pandemic and responded by offering a variety of flexible benefits that helped employees solve their short-term financial challenges while also assisting them in building a stronger future.

Research shows that more employers are offering voluntary benefits across a wide spectrum of needs. The most popular add-ons include: supplemental health insurance policies (e.g., critical illness, accident, and long-term care), legal benefits, identity theft protections, and pet insurance.

Whatever combination of flexible or voluntary benefits you may be considering, you’ll want to be sure it fits your workers’ demographics and pressing needs. A variety of well-chosen benefits can help your employees face their specific challenges while also reducing stress and calming nerves during any period of uncertainty.

3. Help Employees Balance Short-Term and Long-Term Financial Well-Being

In uncertain times, a flexible financial well-being approach that includes the short-term benefits employees need to make it through is more important than ever. That’s why so many employers have introduced the types of benefits that employees feel are most relevant to their current financial concerns. Those may include emergency savings programs, homeownership benefits, and student loan repayment programs, to name just a few.

But this doesn’t mean that the importance of retirement savings and other long-term benefits should be diminished. Far from it. The security of knowing long-term retirement savings is in place can help add to employees’ overall financial well-being, especially during tumultuous times. Through effective communication and education programs, HR professionals can help employees balance short-term and long-term financial needs and goals.

The Takeaway

Periods of uncertainty present both challenges and opportunities for benefits professionals. By prioritizing clear, honest communication, strategically reviewing and expanding voluntary benefits, and offering resources that support both immediate financial needs and long-term security, employers can effectively support their workforce.

These proactive steps not only help employees navigate stressful times but also build essential trust and reinforce the organization’s commitment to employee well-being.


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Salary vs Hourly Pay: How Their Pros and Cons Compare

Salary vs. hourly pay are two ways that businesses classify workers, based on how and when they receive their compensation. There are pros and cons to each, both for employers and employees, as well as numerous rules and laws that can come into play. But it boils down to this: Hourly employees’ compensation is tied to the number of hours they work, including overtime. Salaried employees get a fixed amount.

Key Points

•   Salary and hourly pay are two common ways in which employers compensate workers, with one being fixed and the other tied to hours worked.

•   Hourly employees are paid for each hour worked and are typically eligible for overtime pay if they work more than 40 hours in a week.

•   Salaried employees receive a fixed amount of pay during a set period, regardless of the number of hours they work.

•   Some salaried employees are classified as exempt from overtime pay, while nonexempt employees must receive overtime compensation.

•   Both salary and hourly pay structures have advantages and drawbacks in terms of income stability, benefits, overtime eligibility, and job flexibility.

What Is An Hourly Rate?

An hourly rate is the set per-hour compensation that a worker earns based on their employment contract. That hourly rate can be any number above the federal wage floor, or the minimum wage, of $7.25 per hour. The lowest that an hourly worker in the U.S. can earn is $2.13 per hour, as set by federal law, for workers who receive at least $30 per month in tips.

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What Is a Salary Rate?

As mentioned, salaried employees earn a fixed amount regardless of how many hours they work. As such, a salary rate is what an employee would earn over a fixed amount of time, such as a traditional 40-hour workweek. Since we typically refer to annual salaries, if, for example, job X pays a salary of $100,000 per year, a salary rate could be $1,923.08 per week (a $100,000 annual salary divided by 52 weeks).

The big difference when it comes to exempt salaried workers is that they are generally not eligible for overtime pay if they work beyond the predetermined number of hours (usually 40) set by their employer and applicable laws.

If you want to find out what a good entry-level salary is, you can do some research on averages in your industry and geographic area to get an idea.

Recommended: The Highest Paying Jobs by State

Why Are Some Jobs Hourly and Others Salary?

Federal laws and regulations determine whether some jobs can be exempt from overtime pay rules. This rule helps ensure that more workers are compensated with overtime pay if they work more than the standard 40 hours in a week.

Depending on the state you live in, there may be additional wage and overtime rules that affect how employees are paid.

The Big Difference Between Salary vs Hourly Pay

Overtime pay can be a key differentiator between a salaried and an hourly employee. Overtime pay is given at 1.5 times the rate of the normal hourly rate, commonly referred to as “time and a half.”

A related concept is “exempt” vs. “nonexempt,” where exempt means exempt from overtime wages. Nonexempt employees, on the other hand, receive overtime wages for working more than 40 hours per week.

In certain situations, an employer may end up paying a salaried employee overtime, but it depends on the specific agreement or contract between the two parties.

Additionally, salaried jobs tend to be more administrative, professional, or white collar and may offer more or better fringe benefits than hourly jobs. That’s not always the case, but if you are climbing the corporate ladder and become a salaried employee, you may notice that your compensation package is more comprehensive than the packages of hourly workers.

Recommended: Salary Calculator: Hourly to Salary Conversion

Salary Pay

As noted above, many salaried employees earn a fixed amount regardless of how long they work. There are some obvious pros and cons to salaried positions.

Pros of Salary Pay

One advantage of many salaried positions is that an employee will earn the same amount of money during a given time period regardless of how much they work. So, if they only work 30 hours in one week, they still receive the same amount of pay as they would have if they worked 40 hours.

Salaried jobs often offer better benefits, such as employer-sponsored health insurance and paid vacation days. Salaried jobs may also be more secure than hourly positions and offer workers more opportunities for advancement.

Cons of Salary Pay

Salary pay can be a double-edged sword: While you’ll be paid for 40 hours even if you work only 30, the same applies if you work 50 hours. Some salaried positions may not offer overtime pay if you work more than a standard workweek. That can be a big drawback for some workers.

Similarly, depending on the specifics of the position, it may be harder to keep your personal and professional life separate. Salaried positions may provide more benefits and job security, but that comes at a cost of more demanding work that may encroach on your personal time.

Hourly Pay

Hourly workers earn their paycheck by the hour, which, like salaried positions, also has its pros and cons.

Pros of Hourly Pay

A key advantage of many hourly jobs is that workers are eligible to earn overtime pay, although some employers may try to avoid this by ensuring hourly workers do not work overtime. It may also mean that you’re not working 50 or 60 hours a week like most salaried employees do.

Hourly workers may earn higher pay on certain days, such as holidays, depending on their employer’s policies. In some industries, working overtime may be standard or expected, which may help boost an hourly worker’s earnings above those of salaried workers in some circumstances.

Cons of Hourly Pay

A big disadvantage to hourly-paying jobs is that they can be less secure than salaried positions. Turnover can be high, for example, and if the economy takes a turn for the worse, hourly workers may have reduced hours, or their positions may be furloughed or eliminated. Further, hourly jobs aren’t usually very flexible and may not offer workers paid time off or sick days to workers, for example.

The Takeaway

Salaried workers receive a fixed paycheck regardless of the number of hours they work, whereas hourly workers receive wages based on the number of hours they clock. A key difference between the two is that some salaried workers are exempt from overtime pay, which is 50% more than their standard hourly rate. Each type of employment has its pros and cons, but, in some cases, salaried positions may offer greater job stability.

Regardless of whether you’re a salaried or an hourly employee, a budget planner app, complete with a debt payoff planner, can help keep your finances in order.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Is it better to be paid a salary or an hourly rate?

Salaried positions are often considered more prestigious and can offer more job security and benefits. Many workers feel it’s better to be paid a salary because it’s more predictable, but it ultimately depends on the position and the employee’s personal preferences.

What is the advantage of salary pay?

One advantage of many salaried positions is that you have a fixed paycheck coming your way during a given time period. Of course, that can also be a disadvantage if you regularly work more than 40 hours per week. It may also be easier to budget with a fixed, salaried income.

What are the budget challenges of being a salaried employee?

Salaried employees are, in a sense, on a fixed income; they’re earning the same amount throughout the year and may not be able to increase their pay by working overtime, depending on their classification. If they don’t receive a raise annually, they may see their effective pay decline due to inflation, which can end up straining their budgets.

Do salaried employees ever receive overtime pay?

Some salaried employees may still be eligible for overtime pay, depending on their job classification under federal and state labor laws. Workers who are classified as nonexempt must be paid overtime if they work more than 40 hours in a week. Exempt employees, however, generally do not receive overtime pay.

Can hourly workers earn more than salaried employees?

Yes, in some situations, hourly workers may earn more than salaried employees. If an hourly worker regularly works overtime or receives additional pay for working holidays or extra shifts, their total earnings could exceed a fixed salary. However, their earnings will depend on the specific job, industry, and number of hours worked.


Photo credit: iStock/.shock

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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A brown-haired woman sitting on her living room sofa and stretching her arms while looking at her laptop screen.

30 Best Jobs for Introverts

Introverts can succeed in almost any job that interests them. Contrary to what many people might think, introverts aren’t necessarily shy, but they do like working independently or in small groups. They typically are drawn to inner thoughts and ideas versus focusing on external matters. In addition, they may prefer having some quiet time to reflect and recharge instead of a job that requires nonstop meetings.

Thankfully, there are plenty of jobs that can suit this personality type and offer a challenging and fulfilling career path. Read on to learn more.

Key Points

•   Introverts often thrive in roles that include independent work, quiet environments, and minimal large-group interactions.

•   Many low-stress jobs for introverts leverage analytical, creative, or empathetic skills in one-on-one or small-team settings.

•   High-paying careers such as a physician, a data scientist, and a software developer can suit introverted personalities.

•   Hands-on or detail-oriented roles, including plumbing, landscaping, and proofreading, are ideal for those seeking focus and autonomy.

Self-employment or jobs offering flexible schedules can benefit introverts who prefer to manage their own workload.

What Makes the Ideal Job for an Introvert?

According to conventional psychology, introverts prefer to spend time with just one or two people, rather than larger groups or crowds. They’re not necessarily loners; in fact, many have highly developed social skills. However, they tend to gravitate toward situations and environments in which they feel less pressure to react or respond quickly or to engage with multiple people (such as constantly leading major team meetings).

An ideal job for an introvert may allow them to:

•   Work independently

•   Work alone or in quiet spaces that allow them to think and deploy their analytical and decision-making skills

•   Focus on one task at a time

•   Engage one-on-one (or one-on-a-few) instead of in large groups

•   Leverage their empathy and creativity

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What Kind of Work Does Not Fit an Introvert?

As noted above, jobs that require a lot of collaboration with or presentations to large groups of people may not be a great fit for introverted people. Introverts are likely to be less comfortable with jobs that involve loads of group brainstorming sessions or that require them to regularly verbalize their thoughts and feelings to multiple people at once.

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30 Jobs for Introverts

Finding a rewarding job as an introvert means finding a career that suits your interests and caters to your inner-directed personality type, as described above. Some careers may particularly appeal to people who prefer independent work or minimal social interaction, similar to roles featured in this list of entry-level jobs with little human interaction.

Here are 30 jobs that can be a great match for introverts, with salary information from the Bureau of Labor Statistics.

1. Web Developer or Digital Designer

•   2024 median salary: $95,380

•   Primary duties: This career is all about the design, coding, and development of websites for optimal performance and user experience. This could be a job where an introvert works solo all day, or it might involve small team collaborations. With its union of creativity and analytical insights, web development can be a great option for introverts.

2. Farmer or Rancher

•   2024 median salary: $87,980

•   Primary duties: The image of farmers and ranchers working solo in wide open spaces is iconic. While that can be true, this career may involve some interaction with others on a work team. Primary duties are overseeing the production of crops, livestock, and dairy products.

3. Psychologist

•   2024 median salary: $94,310

•   Primary duties: Psychologists can work in a variety of settings, from a medical center to private practice, but the field involves assessing and supporting cognitive and emotional wellness. This can be a very rewarding career for introverts who want to channel their empathy and social skills.

4. Plumber, Pipefitter, or Steamfitter

•   2024 median salary: $62,970

•   Primary duties: This career is all about installing and repairing pipe fixtures. There aren’t many meetings or lots of large-group interactions. Introverts can enjoy the focus and problem-solving this job demands, and skilled trades such as plumbing are often among the high-paying trade jobs in demand.

5. Postal Service Worker

•   2024 median salary: $57,870

•   Primary duties: Typically, this work involves collecting, sorting, and delivering mail to businesses and private residences or helping post office customers. It can give introverts the opportunity to work alone or have small-scale interactions.

6. Social Worker

•   2024 median salary: $61,330

•   Primary duties: Social workers help people resolve problems in their lives. Introverts who are empathetic listeners, enjoy helping others, and find lots of one-on-one interaction satisfying will likely enjoy social work.

7. Heating, Ventilation, and Air Conditioning Technician

•   2024 median salary: $59,810

•   Primary duties: This job requires workers to assemble and repair heating, cooling, and ventilation systems. It can suit the mechanically inclined and those who like to be immersed in hands-on problem-solving.

8. Environmental Scientist

•   2024 median salary: $80,060

•   Primary duties: In this job, a person uses their knowledge of nature to improve the environment and human health. It can involve time outdoors and in a lab, with opportunities to analyze and interpret research data.

9. Delivery Truck Driver

•   2024 median salary: $42,770

•   Primary duties: For those who like lots of solo time and the feeling of being on the open road, being a delivery truck driver can be a dream job. Duties involve the pickup, transport, and delivery of packages or goods from one location to another.

10. Writer or Author

•   2024 median salary: $72,270

•   Primary Duties: Writing is a diverse career, ranging from writing fiction to composing technical manuals for manufacturers. It can allow an introvert to explore a particular passion in print and often involves a good amount of independent work. Many writers also work remotely, which means they may experience some of the benefits of working from home.

11. Librarian

•   2024 median salary: $64,320

•   Primary duties: This can be a fulfilling career for introverts; most interactions involve collaborating with individuals seeking help with research. Plus, it taps both creativity and problem-solving skills and usually has a steady pace. Bonus: Librarians tend to work in quiet environments.

12. Physician

•   2024 median salary: $239,200

•   Primary duties: This demanding career requires a high level of training. With a salary well into six figures, this is one of the highest-paying jobs on our list. It offers the rewarding work of interacting one-on-one with patients and other members of a medical team to treat illnesses and help people achieve optimal health.

13. Roofer

•   2023 median salary: $50,970

•   Primary duties: For introverts who value independence and enjoy problem-solving, being a roofer can be a good fit. Most of the workday is spent replacing, repairing, and installing roofs on buildings and houses. Many skilled or hands-on careers like this can also fall into the category of well-paying jobs without a college degree.

14. Surveying and Mapping Technician

•   2024 median salary: $51,940

•   Primary duties: Collecting data and taking land measurements in order to create maps of the Earth’s surface is a unique job, melding creative and analytical pursuits. It’s unlikely to involve many large meetings and can give introverts the think time they love.

15. Mechanic

•   2024 median salary: $49,670

•   Primary duties: This job can be a good fit for those who like to work with their hands and problem-solve with a small team as they troubleshoot and repair automobiles and other forms of transportation.

16. Bookkeeper

•   2024 median salary: $49,210

•   Primary Duties: Love a good spreadsheet and balancing finances? Being a bookkeeper can provide satisfying work for those who enjoy working with numbers. The role also has potential as a work-at-home job for retirees.

17. Interpreter or Translator

•   2024 median salary: $59,440

•   Primary duties: Provided you have deep knowledge of one or more foreign languages, this can be a solid job if you’re an introvert, collaborating one-on-one or in small groups to convert one language into another. It may involve translating texts or translating spoken language in real time.

18. Software Quality Assurance Analyst or Tester

•   2024 median salary: $131,450

•   Primary duties: Techies, this one’s for you; it typically involves testing software to identify and debug problems or to learn how the software works. This can offer plenty of focused work time.

19. Marketing Manager

•   2024 median salary: $159,660

•   Primary duties: This potentially high-earning career focuses on managing outreach to build a business or a brand. This can tap an introvert’s creativity and analytical skills. Small team meetings and travel to meet with clients may be part of the job. With this and other high-paying roles, professionals may benefit from understanding salary negotiation tactics and strategies.

20. Photographer

•   2024 median salary: $42,520

•   Primary duties: Photographers produce, shoot, and potentially edit (hello, Photoshop!) images for personal or professional use. It’s a highly creative pursuit that may suit an introvert’s personality. Some photographers build freelance businesses or side gigs that can become part of ways to make extra income from home.

21. Proofreader

•   2024 median salary: $51,100

•   Primary duties: This can be a satisfying job, tapping an introvert’s analytical abilities and giving them space to think as they read content and correct spelling, punctuation, and grammatical errors. Proofreading is usually a quiet, somewhat solitary profession.

22. Landscaper

•   2024 median salary: $38,740

•   Primary duties: There’s not too much large-group interaction if you’re a landscaper. Workdays are spent maintaining outdoor grounds by mowing, trimming, planting, watering, fertilizing, raking, and other methods.

23. Physician Assistant (PA)

•   2024 median salary: $133,260

•   Primary duties: Assisting both physicians and patients can put an introvert’s empathy and technical know-how to good use. It does require specialized training: A PA is similar to a nurse practitioner — one step below a doctor and a step above a nurse. With salaries well into six figures, professionals in roles like this may also want to understand how earnings change over time using a salary inflation calculator.

24. Animal Trainer

•   2024 median salary: $33,860

•   Primary duties: Dog, horse, and other animal lovers may find this to be an ideal career, with time spent teaching animals obedience, staying calm, and assisting people.

25. Medical Transcriptionist

•   2024 median salary: $37,550

•   Primary duties: Medical transcriptionists, as the name indicates, transcribe voice recordings from physicians and nurses and convert them into written reports. This can provide a career with plenty of quiet time for detail-oriented introverts.

26. Floral Designer

•   2024 median salary: $36,120

•   Primary duties: A floral designer can spend their days arranging decorative displays using live, dried, or silk flowers, which can be a creative endeavor without too many big meetings.

27. Data Scientist

•   2024 median salary: $112,590

•   Primary duties: Data scientists deploy analytical tools and techniques to pull valuable insights from data. This is listed as one of the fastest-growing jobs in today’s digital economy.

Recommended: How to Make a Personal Budget

28. Teacher

•   2024 median salary: $64,580

•   Primary duties: Teachers and instructors are responsible for helping students of different ages learn various topics and skills. The job may tap an introvert’s empathy, and it may involve small meetings with students or their parents. Bonus: Teaching can be one of those jobs that pays off student loans through the Public Student Loan Forgiveness program.

29. Hand Sewer

•   2024 median salary: $36,650

•   Primary duties: Technically speaking, this job is about sewing and finishing items with a needle and thread. It can suit craft-oriented, creative, and independent workers who like the mental space it provides.

30. Accountant

•   2024 median salary: $81,680

•   Primary duties: An accountant prepares or reviews financial records, tapping their analytical skills. This career can incorporate interactions with individual clients or businesses, which may suit introverts well.

The Takeaway

There are many challenging and satisfying jobs that can suit introverts, from writer to data scientist to physician. In fact, many high-paying and rewarding jobs are well-suited to the personality traits of introverted people.

Introvert or not, everyone can benefit from better budget planning and tools that give you back control of your finances.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

What are good jobs for introverts?

There are many jobs that suit introverts well and leverage their empathy, creativity, and analytical skills. These can include a research librarian, a physician, or a landscaper, among others.

Is self-employment good for introverts with anxiety?

Self-employment can be a good fit for introverts who experience anxiety working with large teams or with multiple people. However, self-employment can also create stress if it requires you to search for clients or manage a large workload on your own.

What is a good job for someone with introverted qualities?

Any job that allows you to work independently and in a quiet environment at least some of the time is generally better if you’re an introvert. A floral designer and a proofreader are good examples of this.

What types of work environments do introverts typically prefer?

Introverts often do not desire large-group interaction and prefer focused work, small teams, and one-on-one communication to be productive. They generally tend to avoid the overstimulation of constant meetings or crowded workplaces.

Can introverts succeed in high-paying careers?

Yes. Many high-paying careers can suit introverted personality traits. Roles such as physician, software developer, and data scientist often involve analytical thinking, specialized expertise, and focused work that may appeal to introverts while offering strong salary potential.


Photo credit: iStock/Wiphop Sathawirawong

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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