LLC vs S corp for management consultants (2026)
At $110,000 of profit, an S corp election saves a management consultant money over a sole proprietorship in 1 of 51 states, with a $77,000 salary. Pick your state for the calculator with these numbers filled in.
- The IRS treats this work as a specified service trade or business, so the 20% QBI deduction phases out above $201,750 of taxable income (single). Consulting, meaning paid advice and counsel to clients, is a specified service under Treas. Reg. 1.199A-5(b)(2)(vii). law.cornell.edu
- Overhead is low, so most revenue is profit and the S corp payroll tax saving turns on what counts as a reasonable salary for the work. irs.gov, 2026 rates
- Median pay for employees in this job: $101,860 (BLS, May 2025).
| State | Sole proprietor | S corp | Saving |
|---|---|---|---|
| District of Columbia | $34,794 | $34,124 | $670 |
| South Carolina | $28,993 | $29,207 | +$214 |
| Nebraska | $29,362 | $30,027 | +$665 |
| Virginia | $30,478 | $31,185 | +$707 |
| Alabama | $30,260 | $30,976 | +$716 |
| Louisiana | $28,096 | $28,814 | +$718 |
| Missouri | $29,281 | $30,009 | +$728 |
| Mississippi | $28,771 | $29,522 | +$751 |
| Kansas | $30,319 | $31,080 | +$761 |
| New Hampshire | $27,238 | $28,005 | +$767 |
| Arizona | $27,576 | $28,360 | +$784 |
| West Virginia | $29,207 | $29,993 | +$786 |
| Michigan | $29,508 | $30,298 | +$790 |
| Maryland | $29,904 | $30,695 | +$791 |
| Georgia | $29,767 | $30,561 | +$794 |
| Iowa | $28,687 | $29,495 | +$808 |
| New Mexico | $29,092 | $29,910 | +$818 |
| Arkansas | $29,025 | $29,858 | +$833 |
| Indiana | $28,400 | $29,240 | +$840 |
| Kentucky | $28,874 | $29,756 | +$882 |
| Oklahoma | $29,469 | $30,352 | +$883 |
| Texas | $25,414 | $26,380 | +$966 |
| Montana | $29,829 | $30,816 | +$987 |
| Idaho | $29,724 | $30,735 | +$1,011 |
| Utah | $29,963 | $30,987 | +$1,024 |
| South Dakota | $25,414 | $26,442 | +$1,028 |
| Florida | $25,414 | $26,450 | +$1,036 |
| Wisconsin | $29,452 | $30,569 | +$1,117 |
| Pennsylvania | $28,552 | $29,683 | +$1,131 |
| North Carolina | $28,984 | $30,162 | +$1,178 |
| North Dakota | $26,127 | $27,308 | +$1,181 |
| Delaware | $30,977 | $32,203 | +$1,226 |
| Illinois | $30,330 | $31,601 | +$1,271 |
| Maine | $30,702 | $32,014 | +$1,312 |
| Vermont | $29,701 | $31,087 | +$1,386 |
| New York | $30,405 | $31,837 | +$1,432 |
| Wyoming | $25,414 | $26,865 | +$1,451 |
| Minnesota | $30,842 | $32,351 | +$1,509 |
| Connecticut | $29,462 | $30,983 | +$1,521 |
| Alaska | $25,447 | $26,980 | +$1,533 |
| Ohio | $25,414 | $27,010 | +$1,596 |
| Colorado | $29,204 | $31,137 | +$1,933 |
| Nevada | $25,552 | $27,549 | +$1,997 |
| Massachusetts | $30,305 | $32,364 | +$2,059 |
| Rhode Island | $28,668 | $30,811 | +$2,143 |
| California | $30,829 | $32,975 | +$2,146 |
| Oregon | $33,785 | $36,138 | +$2,353 |
| Tennessee | $25,414 | $28,009 | +$2,595 |
| New Jersey | $29,736 | $32,396 | +$2,660 |
| Hawaii | $36,050 | $39,045 | +$2,995 |
| Washington | $27,363 | $30,607 | +$3,244 |
Yearly federal and state tax and fees at $110,000 profit and $187,000 revenue, single filer, $1,800 a year of payroll and return costs.
Questions
Should a management consultant form an S corp?
At $110,000 of profit and a $77,000 salary, an LLC taxed as an S corp costs less than a sole proprietorship in 1 of 51 states. The biggest saving is in District of Columbia ($670 a year), and in Washington it costs $3,244 more.
What salary should a management consultant pay themselves?
The IRS expects pay in line with what the work would earn an employee. The median for employees in this job is $101,860 (BLS, May 2025). The figures here use that, capped at 70% of profit. More on reasonable salary.
Other professions
- Software developer
- Graphic designer
- Photographer
- Real estate agent
- Insurance agent
- Financial advisor
- Therapist
- Physical therapist
- Nurse practitioner
- Physician
- Dentist
- Lawyer
- Accountant
- Freelance writer
- Web developer
- Marketing consultant
- Electrician
- Plumber
- General contractor
- Truck driver
- Hair stylist
- Personal trainer
- Rideshare driver