StructureCost2026

LLC or S corp for a lawyer in North Carolina (2026)

A lawyer in North Carolina with $180,000 of profit pays $53,224 a year in tax and fees as a sole proprietor and $54,723 as an LLC taxed as an S corp, with a $126,000 salary. The S corp starts to pay at about $277,500 of profit.

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

+$1,499 a year

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

Switching from a sole proprietorship to an LLC taxed as an S corp starts to pay at about $277,500 of profit, with the same settings. Setting up costs $125 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.

North Carolina, 2026: $180,000 profit, single filer

ItemSole propLLC as S corpChange
Self-employment taxirs.gov, 2026 rates$25,433$0−$25,433
Federal income taxirs.gov, 2026 rates$21,625$26,675+$5,050
State income tax, after the PTET exclusionncdor.gov, checked Oct 23, 2026$6,166$4,519−$1,647
Annual Reportsosnc.gov, checked Oct 23, 2026$0$200+$200
Payroll tax on your salaryirs.gov, 2026 rates$0$19,662+$19,662
Payroll service and tax return (estimate)$0$1,800+$1,800
North Carolina franchise tax (S corporation)ncdor.gov, checked Oct 23, 2026$0$200+$200
North Carolina pass-through entity tax, paid by the company (elected)ncdor.gov, checked Oct 23, 2026$0$1,667+$1,667
Yearly cost$53,224$54,723+$1,499
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
$120,000$84,000$32,402$32,535$33,567$38,002
$180,000$126,000$53,224$53,353$54,723$60,941
$260,000$160,000$82,838$82,912$81,447$92,826

Salary is the BLS median for the job ($159,670), capped at 70% of profit. Revenue 2.1 times profit. Single filer.

What matters for lawyers

What the switch takes in North Carolina

  1. File the Articles of Organization (Form L-01) with the state: $125 (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 North Carolina 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 North Carolina unemployment tax at 1% on the first $34,200 of wages. des.nc.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, $200 a year, due April 15 each year after the year of formation. New for you: North Carolina franchise tax (S corporation).

Questions

Should a lawyer in North Carolina form an S corp?

At $180,000 of profit, not on these figures: the S corp costs $1,499 a year more than staying a sole proprietor.

Is an LLC worth it for a lawyer in North Carolina?

For tax, a single-member LLC changes nothing: $53,353 a year against $53,224, the difference being North Carolina's LLC fees. It separates business liability and is the base for an S corp election.

More

Other professions in North Carolina
Other states