StructureCost2026

LLC or S corp for a software developer in Virginia (2026)

A software developer in Virginia with $150,000 of profit pays $44,809 a year in tax and fees as a sole proprietor and $45,630 as an LLC taxed as an S corp, with a $105,000 salary. The S corp starts to pay at about $282,500 of profit.

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

+$821 a year

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

Switching from a sole proprietorship to an LLC taxed as an S corp starts to pay at about $282,500 of profit, with the same settings. Setting up costs $100 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.

Virginia, 2026: $150,000 profit, single filer

ItemSole propLLC as S corpChange
Self-employment taxirs.gov, 2026 rates$21,194$0−$21,194
Federal income taxirs.gov, 2026 rates$16,413$20,245+$3,832
State income tax, after the PTET creditlaw.lis.virginia.gov, checked Oct 23, 2026$7,202$5,223−$1,979
Annual Registration Feelaw.lis.virginia.gov, checked Oct 23, 2026$0$50+$50
Payroll tax on your salaryirs.gov, 2026 rates$0$16,307+$16,307
Payroll service and tax return (estimate)$0$1,800+$1,800
Virginia pass-through entity tax, paid by the company (elected)tax.virginia.gov, checked Oct 23, 2026$0$2,005+$2,005
Yearly cost$44,809$45,630+$821
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
$100,000$70,000$26,895$26,926$27,621$31,980
$150,000$105,000$44,809$44,841$45,630$52,120
$220,000$136,000$68,792$68,828$68,330$80,821

Salary is the BLS median for the job ($135,980), capped at 70% of profit. Revenue 2.2 times profit. Single filer.

What matters for software developers

What the switch takes in Virginia

  1. File the Articles of Organization (Form LLC-1011) with the state: $100 (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 Virginia 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 Virginia unemployment tax at 2.5% on the first $8,000 of wages. law.lis.virginia.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 Registration Fee, $50 a year, due Last day of the anniversary month of formation.

Questions

Should a software developer in Virginia form an S corp?

At $150,000 of profit, not on these figures: the S corp costs $821 a year more than staying a sole proprietor.

Is an LLC worth it for a software developer in Virginia?

For tax, a single-member LLC changes nothing: $44,841 a year against $44,809, the difference being Virginia's LLC fees. It separates business liability and is the base for an S corp election.

More

Other professions in Virginia
Other states