StructureCost2026

LLC or S corp for a general contractor in Iowa (2026)

A general contractor in Iowa with $130,000 of profit pays $35,489 a year in tax and fees as a sole proprietor and $36,278 as an LLC taxed as an S corp, with a $91,000 salary. The S corp starts to pay at about $285,000 of profit.

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

+$789 a year

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

Switching from a sole proprietorship to an LLC taxed as an S corp starts to pay at about $285,000 of profit, with the same settings. Setting up costs $50 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.

Iowa, 2026: $130,000 profit, single filer

ItemSole propLLC as S corpChange
Self-employment taxirs.gov, 2026 rates$18,368$0−$18,368
Federal income taxirs.gov, 2026 rates$13,142$16,266+$3,124
State income tax, after the PTET creditrevenue.iowa.gov, checked Oct 23, 2026$3,979$2,889−$1,090
Biennial Reportlegis.iowa.gov, checked Oct 23, 2026$0$15+$15
Payroll tax on your salaryirs.gov, 2026 rates$0$14,169+$14,169
Payroll service and tax return (estimate)$0$1,800+$1,800
Iowa pass-through entity tax, paid by the company (elected)legis.iowa.gov, checked Oct 23, 2026$0$1,139+$1,139
Yearly cost$35,489$36,278+$789
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
$90,000$63,000$21,883$21,892$22,712$26,533
$130,000$91,000$35,489$35,500$36,278$41,956
$180,000$115,000$52,803$52,813$51,883$61,336

Salary is the BLS median for the job ($114,990), capped at 70% of profit. Revenue 6.2 times profit. Single filer.

What matters for general contractors

What the switch takes in Iowa

  1. File the Certificate of Organization with the state: $50 (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 Iowa 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 Iowa unemployment tax at 1% on the first $20,400 of wages. workforce.iowa.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: Biennial Report, $30 every two years, due January 1 to April 1 of odd-numbered years.

Questions

Should a general contractor in Iowa form an S corp?

At $130,000 of profit, not on these figures: the S corp costs $789 a year more than staying a sole proprietor.

Is an LLC worth it for a general contractor in Iowa?

For tax, a single-member LLC changes nothing: $35,500 a year against $35,489, the difference being Iowa's LLC fees. It separates business liability and is the base for an S corp election.

More

Other professions in Iowa
Other states