StructureCost2026

LLC vs S 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 an LLC taxed as an S corp costs $21,219. An LLC taxed as an S corp starts to cost less from about $50,000 of profit.

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

$4,861 a year

saved by switching from a single-member LLC to an LLC taxed as an S corp in Michigan, at these numbers.

Switching from a single-member LLC to an LLC taxed as an S corp starts to pay at about $50,000 of profit, with the same settings. As an LLC taxed as an S corp this uses the state's pass-through entity tax election, which lowers the cost here.

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

ItemLLCLLC as S corpChange
Annual Statementmichigan.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$9,210+$979
State income tax, after the PTET creditmichigan.gov, checked Oct 24, 2026$3,698$1,449−$2,249
Payroll tax on your salaryirs.gov, 2026 rates$0$6,405+$6,405
Payroll service and tax return (estimate)$0$1,800+$1,800
Michigan pass-through entity tax, paid by the company (elected)miningjournal.net, checked Oct 24, 2026$0$2,330+$2,330
Yearly cost$26,080$21,219−$4,861
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

ProfitLLCLLC as S corpDifference
$30,000$6,134$7,585+$1,451
$50,000$11,474$11,240−$234
$75,000$18,226$14,600−$3,626
$100,000$26,080$21,219−$4,861
$150,000$43,298$35,577−$7,721
$200,000$61,099$50,731−$10,368
$300,000$103,975$83,547−$20,428

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

What the switch takes in Michigan

  1. 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
  2. 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.
  3. 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.
  4. Federal return each year: Form 1120-S, due March 15, plus your own Form 1040.
  5. State upkeep each year: Annual Statement, $25 a year, due February 15 (first due the year after formation; LLCs formed after September 30 skip the first one).

What changes between the two

A plain LLC pays self-employment tax of 15.3% on 92.35% of all profit, up to the Social Security wage base of $184,500. Taxed as an S corp, the business pays you a salary, and only the salary carries Social Security and Medicare tax. The rest comes out as a distribution.

The election adds costs: a payroll service, a separate business tax return (Form 1120-S), federal and Michigan unemployment tax on the salary. The calculator counts $1,800 a year for payroll and the return. The IRS expects a reasonable salary for the work, so it cannot be set near zero.

Questions

At what profit does an S corp election pay in Michigan?

About $50,000 a year, on the default salary (40% of profit, at least $30,000 where profit allows) and $1,800 of yearly payroll and return costs. Change the salary in the calculator to see how the point moves.

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

$4,861 a year: Single-member LLC $26,080, LLC taxed as an S corp $21,219.

Does Michigan recognise the S corp election?

Yes. No separate state form is needed.

More for Michigan

Common cases in Michigan

Other states