LLC vs C corp in Michigan: which costs less (2026)

At $100,000 profit in Michigan, a single-member LLC costs $26,080 a year in tax and fees and a C corporation costs $30,538. On these figures a C corporation does not cost less at any profit up to $500,000.

+$4,458 a year

more for a C corporation than a single-member LLC in Michigan, at these numbers.

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

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

Item	LLC	C corp	Change
Annual Reportmichigan.gov, checked Oct 24, 2026	$25	$25	$0
Self-employment taxirs.gov, 2026 rates	$14,126	$0	−$14,126
Federal income taxirs.gov, 2026 rates	$8,231	$4,873	−$3,358
State income taxmichigan.gov, checked Oct 24, 2026	$3,698	$3,173	−$525
Payroll tax on your salaryirs.gov, 2026 rates	$0	$6,405	+$6,405
Payroll service and tax return (estimate)	$0	$2,000	+$2,000
State corporate income taxmichigan.gov, checked Oct 24, 2026	$0	$3,278	+$3,278
Federal corporate income tax (21%)irs.gov, 2026 rates	$0	$10,784	+$10,784
Yearly cost	$26,080	$30,538	+$4,458

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	LLC	C corp	Difference
$30,000	$6,134	$8,077	+$1,943
$50,000	$11,474	$13,793	+$2,319
$75,000	$18,226	$21,017	+$2,791
$100,000	$26,080	$30,538	+$4,458
$150,000	$43,298	$51,246	+$7,948
$200,000	$61,099	$71,136	+$10,037
$300,000	$103,975	$112,268	+$8,293

Federal and Michigan tax and fees, single filer, revenue 1.5 times profit, default salary for S and C corps. "Difference" is C corporation minus Single-member LLC.

What the switch takes in Michigan

Either convert the LLC to a corporation under state law, or keep the LLC and elect corporate tax treatment with IRS Form 8832.
Register with Michigan 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 Michigan unemployment tax at 2.7% on the first $9,000 of wages. michigan.gov See what payroll costs.
Federal return each year: Form 1120, due April 15 for a calendar year.
State upkeep each year: Annual Report, $25 a year, due May 15 (starting the year after incorporation).

What changes between the two

A C corporation pays 21% federal tax and Michigan corporate tax on its profit, and the owner pays tax again on dividends (the double tax). An LLC 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 Michigan?

Nothing. C corporation costs $4,458 a year more ($30,538 against $26,080).

When does a C corp make sense in Michigan?

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 Michigan

Common cases in Michigan

Other states