StructureCost2026

LLC or S corp for a physical therapist in Alabama (2026)

A physical therapist in Alabama with $110,000 of profit pays $30,260 a year in tax and fees as a sole proprietor and $30,976 as an LLC taxed as an S corp, with a $77,000 salary. The S corp starts to pay at about $272,500 of profit.

More settings revenue, salary, filing status, payroll costs, PTET

+$716 a year

more for an LLC taxed as an S corp than a sole proprietorship in Alabama, at these numbers.

Switching from a sole proprietorship to an LLC taxed as an S corp starts to pay at about $272,500 of profit, with the same settings. Setting up costs $200 once in state filing fees. As an LLC taxed as an S corp this uses the state's pass-through entity tax election, which lowers the cost here.

Alabama, 2026: $110,000 profit, single filer

ItemSole propLLC as S corpChange
Self-employment taxirs.gov, 2026 rates$15,543$0−$15,543
Federal income taxirs.gov, 2026 rates$9,871$12,299+$2,428
State income tax, after the PTET creditrevenue.alabama.gov, checked Oct 20, 2026$4,846$3,585−$1,261
Payroll tax on your salaryirs.gov, 2026 rates$0$12,039+$12,039
Payroll service and tax return (estimate)$0$1,800+$1,800
Alabama pass-through entity tax, paid by the company (elected)revenue.alabama.gov, checked Oct 20, 2026$0$1,253+$1,253
Yearly cost$30,260$30,976+$716
What these figures count
  • State income tax, and state taxes on the business itself: franchise, LLC, S corp, gross receipts and excise taxes.
  • Social Security and Medicare on both sides of an owner salary, federal unemployment tax and the state's new-employer rate.
  • The 20% qualified business income deduction with its income limits and the professional-service rule.
  • Yearly report fees, and a cost you can change for payroll and the business tax return.

Many S corp calculators leave out state taxes and the QBI deduction, which can make the election look better than it is.

At three profit levels

ProfitSalary usedSole propLLCLLC as S corpC corp
$80,000$56,000$20,100$20,100$20,486$23,611
$110,000$77,000$30,260$30,331$30,976$35,900
$160,000$103,000$47,834$47,935$47,093$55,902

Salary is the BLS median for the job ($102,760), capped at 70% of profit. Revenue 2.4 times profit. Single filer.

What matters for physical therapists

What the switch takes in Alabama

  1. File the Certificate of Formation (Domestic LLC) with the state: $200 (fee).
  2. Get an EIN from the IRS (free, online) and open a business bank account in the new name.
  3. Check the business can elect: no more than 100 shareholders, all of them US citizens or residents (no nonresident alien owners), and one class of stock. IRS
  4. File IRS Form 2553 to elect S corp tax treatment, within 2 months and 15 days of the start of the tax year it should apply to. See how the S corp election works.
  5. Register with Alabama as an employer and run payroll for your own salary: federal Forms 941 each quarter, Form 940 and a W-2 each year. New employers pay Alabama unemployment tax at 2.7% on the first $8,000 of wages. workforce.alabama.gov See what payroll costs.
  6. Federal return each year: Form 1120-S, due March 15, plus your own Form 1040.
  7. State upkeep each year: no yearly report fee, due none. New for you: Alabama Business Privilege Tax.

Questions

Should a physical therapist in Alabama form an S corp?

At $110,000 of profit, not on these figures: the S corp costs $716 a year more than staying a sole proprietor.

Is an LLC worth it for a physical therapist in Alabama?

For tax, a single-member LLC changes nothing: $30,331 a year against $30,260, the difference being Alabama's LLC fees and LLC taxes. It separates business liability and is the base for an S corp election.

More

Other professions in Alabama
Other states