StructureCost2026

LLC or S corp for a therapist in Massachusetts (2026)

A therapist in Massachusetts with $70,000 of profit pays $17,376 a year in tax and fees as a sole proprietor and $18,877 as an LLC taxed as an S corp, with a $49,000 salary. The S corp starts to pay at about $287,500 of profit.

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

+$1,501 a year

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

Switching from a sole proprietorship to an LLC taxed as an S corp starts to pay at about $287,500 of profit, with the same settings. Setting up costs $500 once in state filing fees.

Massachusetts, 2026: $70,000 profit, single filer

ItemSole propLLC as S corpChange
Self-employment taxirs.gov, 2026 rates$9,891$0−$9,891
Federal income taxirs.gov, 2026 rates$4,452$5,052+$600
State income taxmass.gov, checked Oct 23, 2026$3,033$2,934−$99
Annual Reportsec.state.ma.us, checked Oct 23, 2026$0$500+$500
Payroll tax on your salaryirs.gov, 2026 rates$0$7,910+$7,910
State disability and paid leavemass.gov, checked Oct 23, 2026$0$225+$225
Payroll service and tax return (estimate)$0$1,800+$1,800
Massachusetts corporate excise minimum (S corporation)mass.gov, checked Oct 23, 2026$0$456+$456
Yearly cost$17,376$18,877+$1,501
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
$40,000$28,000$9,066$9,427$10,918$11,570
$70,000$49,000$17,376$17,737$18,877$20,727
$90,000$59,000$23,278$23,603$24,529$28,493

Salary is the BLS median for the job ($59,350), capped at 70% of profit. Revenue 1.8 times profit. Single filer.

What matters for therapists

What the switch takes in Massachusetts

  1. File the Certificate of Organization with the state: $500 (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 Massachusetts 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 Massachusetts unemployment tax at 2.42% on the first $15,000 of wages. oui.doleta.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: Annual Report, $500 a year, due Anniversary date of the original filing. New for you: Massachusetts corporate excise minimum (S corporation).

Questions

Should a therapist in Massachusetts form an S corp?

At $70,000 of profit, not on these figures: the S corp costs $1,501 a year more than staying a sole proprietor.

Is an LLC worth it for a therapist in Massachusetts?

For tax, a single-member LLC changes nothing: $17,737 a year against $17,376, the difference being Massachusetts's LLC fees. It separates business liability and is the base for an S corp election.

More

Other professions in Massachusetts
Other states