StructureCost2026

LLC vs C corp in Tennessee: which costs less (2026)

At $100,000 profit in Tennessee, a single-member LLC costs $27,161 a year in tax and fees and a C corporation costs $27,579. A C corporation starts to cost less from about $42,500 of profit.

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

+$418 a year

more for a C corporation than a single-member LLC in Tennessee, at these numbers.

Switching from a single-member LLC to a C corporation starts to pay at about $42,500 of profit, with the same settings.

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

ItemLLCC corpChange
Annual Reportsos.tn.gov, checked Oct 23, 2026$300$20−$280
Tennessee franchise taxtn.gov, checked Oct 23, 2026$100$100$0
Tennessee excise taxtn.gov, checked Oct 23, 2026$6,500$3,556−$2,944
Self-employment taxirs.gov, 2026 rates$13,155$0−$13,155
Federal income taxirs.gov, 2026 rates$7,106$4,835−$2,271
Payroll tax on your salaryirs.gov, 2026 rates$0$6,351+$6,351
Payroll service and tax return (estimate)$0$2,000+$2,000
Federal corporate income tax (21%)irs.gov, 2026 rates$0$10,717+$10,717
Yearly cost$27,161$27,579+$418
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

ProfitLLCC corpDifference
$30,000$7,025$7,293+$268
$50,000$12,541$12,380−$161
$75,000$19,554$18,914−$640
$100,000$27,161$27,579+$418
$150,000$44,663$46,634+$1,971
$200,000$62,569$64,871+$2,302
$300,000$100,567$102,669+$2,102

Federal and Tennessee tax and fees, single filer, revenue 1.5 times profit, default salary for S and C corps. "Difference" is C corporation minus Single-member LLC.

What the switch takes in Tennessee

  1. Either convert the LLC to a corporation under state law, or keep the LLC and elect corporate tax treatment with IRS Form 8832.
  2. Register with Tennessee 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 Tennessee unemployment tax at 2.7% on the first $7,000 of wages. tn.gov See what payroll costs.
  3. Federal return each year: Form 1120, due April 15 for a calendar year.
  4. State upkeep each year: Annual Report, $20 a year, due 1st day of the 4th month after fiscal year end (April 1 for calendar year).

What changes between the two

A C corporation pays 21% federal tax on its profit, and the owner pays tax again on dividends (the double tax). An LLC pays no federal income tax itself: profit lands on the owner's return, where the 20% qualified business income deduction can apply.

The figures assume all C corp profit after tax is paid out as dividends. Profit kept in the company to grow it is taxed only at the corporate rate until it is paid out, which is where a C corp can come out ahead.

Questions

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

Nothing. C corporation costs $418 a year more ($27,579 against $27,161).

When does a C corp make sense in Tennessee?

Mostly when profit stays in the company, when outside investors need one, or for the qualified small business stock exclusion. For an owner who takes the profit out, the second tax on dividends usually costs more. On these figures the C corp costs less from about $42,500.

More for Tennessee

Common cases in Tennessee

Other states