StructureCost2026

LLC or S corp for a financial advisor in Minnesota (2026)

A financial advisor in Minnesota with $120,000 of profit pays $34,521 a year in tax and fees as a sole proprietor and $36,052 as an LLC taxed as an S corp, with a $84,000 salary. The S corp starts to pay at about $290,000 of profit.

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

+$1,531 a year

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

Switching from a sole proprietorship to an LLC taxed as an S corp starts to pay at about $290,000 of profit, with the same settings. Setting up costs $155 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.

Minnesota, 2026: $120,000 profit, single filer

ItemSole propLLC as S corpChange
Self-employment taxirs.gov, 2026 rates$16,955$0−$16,955
Federal income taxirs.gov, 2026 rates$11,506$13,873+$2,367
State income tax, after the PTET creditrevenue.state.mn.us, checked Oct 23, 2026$6,060$3,377−$2,683
Payroll tax on your salaryirs.gov, 2026 rates$0$14,010+$14,010
State disability and paid leavedli.mn.gov, checked Oct 23, 2026$0$370+$370
Payroll service and tax return (estimate)$0$1,800+$1,800
Minnesota pass-through entity tax, paid by the company (elected)revenue.state.mn.us, checked Oct 23, 2026$0$2,622+$2,622
Yearly cost$34,521$36,052+$1,531
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$20,180$20,180$21,250$24,628
$120,000$84,000$34,521$34,521$36,052$41,916
$170,000$105,000$53,430$53,430$52,485$63,642

Salary is the BLS median for the job ($105,070), capped at 70% of profit. Revenue 5 times profit. Single filer.

What matters for financial advisors

What the switch takes in Minnesota

  1. File the Articles of Organization (Chapter 322C) with the state: $155 (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 Minnesota 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 Minnesota unemployment tax at 1.596% on the first $44,000 of wages. house.mn.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 Renewal, no fee, due December 31. New for you: Minnesota minimum fee.

Questions

Should a financial advisor in Minnesota form an S corp?

At $120,000 of profit, not on these figures: the S corp costs $1,531 a year more than staying a sole proprietor.

Is an LLC worth it for a financial advisor in Minnesota?

For tax, a single-member LLC changes nothing: $34,521 a year against $34,521, the difference being Minnesota's LLC fees and LLC taxes. It separates business liability and is the base for an S corp election.

More

Other professions in Minnesota
Other states