I'm working on a "self funded" acquisition with SBA7 debt. I will have some outside investors. Many searchers structure their deals as LLCs, and as a result, by my interpretation, every member of the LLC has to pay self-employment taxes (15.3%, medicare + social) on their pro-rata share of the pass-through net income at the end of the year. Many business owners elect to file as S Corp to avoid this self-employment tax. However, with outside investors who want to invest via their LLCs, this doesn't seem to work.

Have other searchers using an LLC structure found a way to minimize this self-employment tax? LLC owner of the business, you work for a separate C Corp mgmt. company? 15% on my share of net income in the LLC, even if not making distributions (i.e. putting that NI on the BS for growth / add-ons) is pretty material.

Of course the general transaction could be structured as a C Corp (I've read those threads), but my acquisition is not QSBS eligible so that route loses a lot of its appeal.