StructureCost2026

LLC vs S 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 an LLC taxed as an S corp costs $21,055. An LLC taxed as an S corp starts to cost less from about $35,000 of profit.

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

$6,106 a year

saved by switching from a single-member LLC to an LLC taxed as an S corp in Tennessee, at these numbers.

Switching from a single-member LLC to an LLC taxed as an S corp starts to pay at about $35,000 of profit, with the same settings.

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

ItemLLCLLC as S corpChange
Annual Reportsos.tn.gov, checked Oct 23, 2026$300$300$0
Tennessee franchise taxtn.gov, checked Oct 23, 2026$100$100$0
Tennessee excise taxtn.gov, checked Oct 23, 2026$6,500$3,569−$2,931
Self-employment taxirs.gov, 2026 rates$13,155$0−$13,155
Federal income taxirs.gov, 2026 rates$7,106$8,935+$1,829
Payroll tax on your salaryirs.gov, 2026 rates$0$6,351+$6,351
Payroll service and tax return (estimate)$0$1,800+$1,800
Yearly cost$27,161$21,055−$6,106
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

ProfitLLCLLC as S corpDifference
$30,000$7,025$7,160+$135
$50,000$12,541$10,829−$1,712
$75,000$19,554$14,698−$4,856
$100,000$27,161$21,055−$6,106
$150,000$44,663$35,056−$9,607
$200,000$62,569$49,877−$12,692
$300,000$100,567$81,765−$18,802

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

What the switch takes in Tennessee

  1. 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
  2. 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.
  3. Tennessee does not follow the S election: the state taxes the company as a corporation, which the figures above include.
  4. 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.
  5. Federal return each year: Form 1120-S, due March 15, plus your own Form 1040.
  6. State upkeep each year: Annual Report, $300 a year, due 1st day of the 4th month after fiscal year end (April 1 for calendar year).

What changes between the two

A plain LLC pays self-employment tax of 15.3% on 92.35% of all profit, up to the Social Security wage base of $184,500. Taxed as an S corp, the business pays you a salary, and only the salary carries Social Security and Medicare tax. The rest comes out as a distribution.

The election adds costs: a payroll service, a separate business tax return (Form 1120-S), federal and Tennessee unemployment tax on the salary. The calculator counts $1,800 a year for payroll and the return. The IRS expects a reasonable salary for the work, so it cannot be set near zero.

Questions

At what profit does an S corp election pay in Tennessee?

About $35,000 a year, on the default salary (40% of profit, at least $30,000 where profit allows) and $1,800 of yearly payroll and return costs. Change the salary in the calculator to see how the point moves.

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

$6,106 a year: Single-member LLC $27,161, LLC taxed as an S corp $21,055.

Does Tennessee recognise the S corp election?

No. Tennessee taxes S corporations as corporations, and the calculator includes that.

More for Tennessee

Common cases in Tennessee

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