StructureCost2026

LLC or S corp for a management consultant in Tennessee (2026)

A management consultant in Tennessee with $110,000 of profit pays $25,414 a year in tax and fees as a sole proprietor and $28,009 as an LLC taxed as an S corp, with a $77,000 salary. On these figures the S corp does not pay at any profit up to $500,000.

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

+$2,595 a year

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

With these settings the switch does not pay at any profit from $10,000 to $500,000. Setting up costs $300 once in state filing fees.

Tennessee, 2026: $110,000 profit, single filer

ItemSole propLLC as S corpChange
Self-employment taxirs.gov, 2026 rates$15,543$0−$15,543
Federal income taxirs.gov, 2026 rates$9,871$12,167+$2,296
Annual Reportsos.tn.gov, checked Oct 23, 2026$0$300+$300
Payroll tax on your salaryirs.gov, 2026 rates$0$12,012+$12,012
Payroll service and tax return (estimate)$0$1,800+$1,800
Tennessee franchise taxtn.gov, checked Oct 23, 2026$0$100+$100
Tennessee excise taxtn.gov, checked Oct 23, 2026$0$1,630+$1,630
Yearly cost$25,414$28,009+$2,595
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$16,648$20,956$18,479$20,495
$110,000$77,000$25,414$30,662$28,009$31,461
$160,000$102,000$40,664$48,163$42,952$49,378

Salary is the BLS median for the job ($101,860), capped at 70% of profit. Revenue 1.7 times profit. Single filer.

What matters for management consultants

What the switch takes in Tennessee

  1. File the Articles of Organization (Form SS-4270) with the state: $300 (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. Tennessee does not follow the S election: the state taxes the company as a corporation, which the figures above include.
  6. 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.
  7. Federal return each year: Form 1120-S, due March 15, plus your own Form 1040.
  8. 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). New for you: Tennessee franchise tax, Tennessee excise tax.

Questions

Should a management consultant in Tennessee form an S corp?

At $110,000 of profit, not on these figures: the S corp costs $2,595 a year more than staying a sole proprietor.

Is an LLC worth it for a management consultant in Tennessee?

For tax, a single-member LLC changes nothing: $30,662 a year against $25,414, the difference being Tennessee's LLC fees and LLC taxes. It separates business liability and is the base for an S corp election.

More

Other professions in Tennessee
Other states