StructureCost2026

LLC or S corp for a lawyer in California (2026)

A lawyer in California with $180,000 of profit pays $58,523 a year in tax and fees as a sole proprietor and $61,490 as an LLC taxed as an S corp, with a $126,000 salary. On these figures the S corp does not pay at any profit up to $500,000.

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

+$2,967 a year

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

With these settings the switch does not pay at any profit from $10,000 to $500,000. Setting up costs $70 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.

California, 2026: $180,000 profit, single filer

ItemSole propLLC as S corpChange
Self-employment taxirs.gov, 2026 rates$25,433$0−$25,433
Federal income taxirs.gov, 2026 rates$21,625$26,195+$4,570
State income tax, after the PTET creditftb.ca.gov, checked Oct 23, 2026$11,465$7,626−$3,839
Statement of Information (Form LLC-12)sos.ca.gov, checked Oct 23, 2026$0$10+$10
Payroll tax on your salaryirs.gov, 2026 rates$0$19,565+$19,565
State disability and paid leaveedd.ca.gov, checked Oct 23, 2026$0$1,638+$1,638
Payroll service and tax return (estimate)$0$1,800+$1,800
California S corporation tax (1.5%)ftb.ca.gov, checked Oct 23, 2026$0$800+$800
California pass-through entity tax, paid by the company (elected)ftb.ca.gov, checked Oct 23, 2026$0$3,856+$3,856
Yearly cost$58,523$61,490+$2,967
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
$120,000$84,000$34,741$35,783$36,951$42,026
$180,000$126,000$58,523$59,540$61,490$68,953
$260,000$160,000$90,724$92,142$91,893$106,379

Salary is the BLS median for the job ($159,670), capped at 70% of profit. Revenue 2.1 times profit. Single filer.

What matters for lawyers

What the switch takes in California

  1. File the Articles of Organization (Form LLC-1) with the state: $70 (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 California 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 California unemployment tax at 3.4% on the first $7,000 of wages. edd.ca.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: Statement of Information (Form LLC-12), $20 every two years, due within 90 days of formation, then every two years by the end of the registration month. New for you: California S corporation tax (1.5%).

Questions

Should a lawyer in California form an S corp?

At $180,000 of profit, not on these figures: the S corp costs $2,967 a year more than staying a sole proprietor.

Is an LLC worth it for a lawyer in California?

For tax, a single-member LLC changes nothing: $59,540 a year against $58,523, the difference being California's LLC fees and LLC taxes. It separates business liability and is the base for an S corp election.

More

Other professions in California
Other states