StructureCost2026

LLC vs S corp in California: which costs less (2026)

At $100,000 profit in California, a single-member LLC costs $27,409 a year in tax and fees and an LLC taxed as an S corp costs $23,177. An LLC taxed as an S corp starts to cost less from about $52,500 of profit.

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

$4,232 a year

saved by switching from a single-member LLC to an LLC taxed as an S corp in California, at these numbers.

Switching from a single-member LLC to an LLC taxed as an S corp starts to pay at about $52,500 of profit, with the same settings. 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: $100,000 profit, single filer

ItemLLCLLC as S corpChange
Statement of Information (Form LLC-12)sos.ca.gov, checked Oct 23, 2026$10$10$0
California LLC annual taxftb.ca.gov, checked Oct 23, 2026$800$0−$800
Self-employment taxirs.gov, 2026 rates$14,015$0−$14,015
Federal income taxirs.gov, 2026 rates$8,103$8,593+$490
State income taxftb.ca.gov, checked Oct 23, 2026$4,481$0−$4,481
Payroll tax on your salaryirs.gov, 2026 rates$0$6,407+$6,407
State disability and paid leaveedd.ca.gov, checked Oct 23, 2026$0$520+$520
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$823+$823
California pass-through entity tax, paid by the company (elected)ftb.ca.gov, checked Oct 23, 2026$0$5,024+$5,024
Yearly cost$27,409$23,177−$4,232
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.

Yearly cost at each profit level

ProfitLLCLLC as S corpDifference
$30,000$6,134$8,044+$1,910
$50,000$11,319$11,647+$328
$75,000$18,561$15,631−$2,930
$100,000$27,409$23,177−$4,232
$150,000$46,973$39,897−$7,076
$200,000$67,662$57,750−$9,912
$300,000$111,444$95,364−$16,080

Federal and California tax and fees, single filer, revenue 1.5 times profit, default salary for S and C corps. "Difference" is LLC taxed as an S corp minus Single-member LLC.

What the switch takes in California

  1. 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
  2. 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.
  3. 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.
  4. Federal return each year: Form 1120-S, due March 15, plus your own Form 1040.
  5. 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%).

What changes between the two

A plain LLC pays self-employment tax of 15.3% on 92.35% of all profit, up to the Social Security wage base of $184,500. Taxed as an S corp, the business pays you a salary, and only the salary carries Social Security and Medicare tax. The rest comes out as a distribution.

The election adds costs: a payroll service, a separate business tax return (Form 1120-S), federal and California unemployment tax on the salary, and California S corporation tax (1.5%). The calculator counts $1,800 a year for payroll and the return. The IRS expects a reasonable salary for the work, so it cannot be set near zero.

Questions

At what profit does an S corp election pay in California?

About $52,500 a year, on the default salary (40% of profit, at least $30,000 where profit allows) and $1,800 of yearly payroll and return costs. Change the salary in the calculator to see how the point moves.

How much does it save at $100,000 in California?

$4,232 a year: Single-member LLC $27,409, LLC taxed as an S corp $23,177.

Does California recognise the S corp election?

Yes. No separate state form is needed.

More for California

Common cases in California

Other states