StructureCost2026

LLC or S corp for a management consultant in Michigan (2026)

A management consultant in Michigan with $110,000 of profit pays $29,508 a year in tax and fees as a sole proprietor and $30,298 as an LLC taxed as an S corp, with a $77,000 salary. The S corp starts to pay at about $275,000 of profit.

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

+$790 a year

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

Switching from a sole proprietorship to an LLC taxed as an S corp starts to pay at about $275,000 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.

Michigan, 2026: $110,000 profit, single filer

ItemSole propLLC as S corpChange
Self-employment taxirs.gov, 2026 rates$15,543$0−$15,543
Federal income taxirs.gov, 2026 rates$9,871$12,323+$2,452
State income tax, after the PTET creditmichigan.gov, checked Oct 24, 2026$4,094$3,022−$1,072
Annual Statementmichigan.gov, checked Oct 24, 2026$0$25+$25
Payroll tax on your salaryirs.gov, 2026 rates$0$12,066+$12,066
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$1,062+$1,062
Yearly cost$29,508$30,298+$790
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
$80,000$56,000$19,557$19,575$20,012$23,083
$110,000$77,000$29,508$29,524$30,298$35,150
$160,000$102,000$46,733$46,749$45,898$54,782

Salary is the BLS median for the job ($101,860), capped at 70% of profit. Revenue 1.7 times profit. Single filer.

What matters for management consultants

What the switch takes in Michigan

  1. File the Articles of Organization (CSCL/CD-700) 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 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.
  6. Federal return each year: Form 1120-S, due March 15, plus your own Form 1040.
  7. 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).

Questions

Should a management consultant in Michigan form an S corp?

At $110,000 of profit, not on these figures: the S corp costs $790 a year more than staying a sole proprietor.

Is an LLC worth it for a management consultant in Michigan?

For tax, a single-member LLC changes nothing: $29,524 a year against $29,508, the difference being Michigan's LLC fees. It separates business liability and is the base for an S corp election.

More

Other professions in Michigan
Other states