StructureCost2026

LLC or S corp for a hair stylist in District of Columbia (2026)

A hair stylist in District of Columbia with $40,000 of profit pays $9,847 a year in tax and fees as a sole proprietor and $10,119 as an LLC taxed as an S corp, with a $28,000 salary. The S corp starts to pay at about $50,000 of profit.

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

+$272 a year

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

Switching from a sole proprietorship to an LLC taxed as an S corp starts to pay at about $50,000 of profit, with the same settings. Setting up costs $99 once in state filing fees.

District of Columbia, 2026: $40,000 profit, single filer

ItemSole propLLC as S corpChange
DC unincorporated business franchise taxotr.cfo.dc.gov, checked Oct 23, 2026$1,898$0−$1,898
Self-employment taxirs.gov, 2026 rates$5,384$0−$5,384
Federal income taxirs.gov, 2026 rates$1,606$1,830+$224
State income taxotr.cfo.dc.gov, checked Oct 23, 2026$959$920−$39
Biennial Reportdlcp.dc.gov, checked Oct 23, 2026$0$150+$150
Payroll tax on your salaryirs.gov, 2026 rates$0$4,797+$4,797
Payroll service and tax return (estimate)$0$1,800+$1,800
DC corporation franchise tax on S corporationsotr.cfo.dc.gov, checked Oct 23, 2026$0$622+$622
Yearly cost$9,847$10,119+$272
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
$30,000$21,000$6,649$6,759$7,280$7,966
$40,000$28,000$9,847$9,953$10,119$10,944
$60,000$36,000$16,395$16,503$15,400$17,268

Salary is the BLS median for the job ($35,790), capped at 70% of profit. Revenue 2.7 times profit. Single filer.

What matters for hair stylists

What the switch takes in District of Columbia

  1. File the Articles of Organization (Form DLC-1) with the state: $99 (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. District of Columbia does not follow the S election: the state taxes the company as a corporation, which the figures above include.
  6. Register with District of Columbia 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 District of Columbia unemployment tax at 2.7% on the first $9,000 of wages. does.dc.gov See what payroll costs.
  7. Federal return each year: Form 1120-S, due March 15, plus your own Form 1040.
  8. State upkeep each year: Biennial Report, $300 every two years, due April 1 every second year, first due April 1 of the year after formation. New for you: DC corporation franchise tax on S corporations.

Questions

Should a hair stylist in District of Columbia form an S corp?

At $40,000 of profit, not on these figures: the S corp costs $272 a year more than staying a sole proprietor.

Is an LLC worth it for a hair stylist in District of Columbia?

For tax, a single-member LLC changes nothing: $9,953 a year against $9,847, the difference being District of Columbia's LLC fees. It separates business liability and is the base for an S corp election.

More

Other professions in District of Columbia
Other states