Sole proprietorship vs C corp in Indiana: which costs less (2026)

At $100,000 profit in Indiana, a sole proprietorship costs $25,077 a year in tax and fees and a C corporation costs $29,315. On these figures a C corporation does not cost less at any profit up to $500,000.

+$4,238 a year

more for a C corporation than a sole proprietorship in Indiana, at these numbers.

With these settings the switch does not pay at any profit from $10,000 to $500,000. Setting up costs $95 once in state filing fees.

Indiana, 2026: $100,000 profit, single filer

Item	Sole prop	C corp	Change
Self-employment taxirs.gov, 2026 rates	$14,130	$0	−$14,130
Federal income taxirs.gov, 2026 rates	$8,235	$4,946	−$3,289
State income taxin.gov, checked Oct 20, 2026	$2,712	$2,362	−$350
Business Entity Reportin.gov, checked Oct 20, 2026	$0	$16	+$16
Payroll tax on your salaryirs.gov, 2026 rates	$0	$6,400	+$6,400
Payroll service and tax return (estimate)	$0	$2,000	+$2,000
State corporate income taxin.gov, checked Oct 20, 2026	$0	$2,678	+$2,678
Federal corporate income tax (21%)irs.gov, 2026 rates	$0	$10,913	+$10,913
Yearly cost	$25,077	$29,315	+$4,238

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

Profit	Sole prop	C corp	Difference
$30,000	$5,974	$7,943	+$1,969
$50,000	$11,073	$13,336	+$2,263
$75,000	$17,522	$20,107	+$2,585
$100,000	$25,077	$29,315	+$4,238
$150,000	$41,690	$49,285	+$7,595
$200,000	$58,884	$68,438	+$9,554
$300,000	$100,490	$108,149	+$7,659

Federal and Indiana tax and fees, single filer, revenue 1.5 times profit, default salary for S and C corps. "Difference" is C corporation minus Sole proprietorship.

What the switch takes in Indiana

File the Articles of Incorporation (State Form 4159) with the state: $95 (fee).
Get an EIN from the IRS (free, online) and open a business bank account in the new name.
Incorporate with the state, then issue shares to yourself.
Register with Indiana 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 Indiana unemployment tax at 2.5% on the first $9,500 of wages. in.gov See what payroll costs.
Federal return each year: Form 1120, due April 15 for a calendar year.
State upkeep each year: Business Entity Report, $31 every two years, due End of the anniversary month of incorporation, every other year.

What changes between the two

A C corporation pays 21% federal tax and Indiana corporate tax on its profit, and the owner pays tax again on dividends (the double tax). A sole proprietorship pays no federal income tax itself: profit lands on the owner's return, where the 20% qualified business income deduction can apply.

The figures assume all C corp profit after tax is paid out as dividends. Profit kept in the company to grow it is taxed only at the corporate rate until it is paid out, which is where a C corp can come out ahead.

Questions

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

Nothing. C corporation costs $4,238 a year more ($29,315 against $25,077).

When does a C corp make sense in Indiana?

Mostly when profit stays in the company, when outside investors need one, or for the qualified small business stock exclusion. For an owner who takes the profit out, the second tax on dividends usually costs more. On these figures it never costs less up to $500,000.

More for Indiana

Common cases in Indiana

Other states