Business taxes in United States: calculator for sole proprietors and companies
Choose a sector, a legal form and a tax system, enter your annual revenue and expenses — the calculator shows every tax and contribution, the total and what you keep.
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Legal forms
Sole proprietor / LLC Sole proprietorship / single-member LLC (disregarded entity)
You run the business yourself or through an LLC with one member. For federal tax a single-member LLC is disregarded, so in both cases profit goes on your Form 1040. A sole proprietor is liable for business debts with all personal property; an LLC protects personal property from business debts.
Requirements
A sole proprietorship needs no state filing. An LLC is formed by filing Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs (LARA): $50, online.
An LLC files an annual statement with LARA by 15 February each year: $25.
Federal return: Form 1040 with Schedule C (profit or loss) and Schedule SE (self-employment tax) by 15 April of the following year.
If you expect to owe $1,000 or more for the year, pay estimated tax in quarterly instalments (Form 1040-ES).
Selling goods at retail requires a Michigan sales tax license (valid 1 January – 31 December) — see the sector notes.
Sole proprietorSole proprietorship / single-member LLC
Profit goes on Schedule C of your Form 1040. You pay federal income tax at 10–37%, self-employment tax of 15.3% on 92.35% of profit (the 12.4% part only up to $184,500), Michigan tax at 4.25% and Detroit tax at 2.4%. Half of the SE tax is deductible; the QBI deduction is up to 20% of profit, but consulting is a specified service business, so it phases out between $201,750 and $276,750 of taxable income.
Conditions
The US has no VAT; state and local sales taxes are not included.
Minimum QBI deduction of $400 if QBI from the active business (after the consulting phase-out) is at least $1,000; above $276,750 of taxable income consulting gets no QBI deduction.
Additional Medicare Tax of 0.9% applies to self-employment income above $200,000.
Outside consulting (marketing, design, engineering, services to individuals, trade, manufacturing) the business is not an SSTB: between $201,750 and $276,750 of taxable income the QBI deduction falls in proportion, and above that, with no employee wages or business property, only the $400 minimum remains.
Corporation (C corp) C corporation (Michigan for-profit corporation)
A separate legal entity owned by shareholders: you risk only what you put in. The corporation pays its own income tax, and dividends are taxed again in your hands. An LLC can also elect to be taxed as a corporation (Form 8832).
Requirements
Articles of Incorporation are filed with LARA: $60 ($10 filing fee plus $50 for up to 60,000 authorised shares).
Annual report to LARA by 15 May: $25 (if late, up to $75).
Federal Form 1120 by the 15th day of the 4th month after the tax year ends (15 April for a calendar year).
Michigan Corporate Income Tax: quarterly estimates (15 April, 15 July, 15 October, 15 January) and an annual return by 30 April — only with gross receipts of $350,000 or more and tax above $100.
The corporation pays 21% federal corporate income tax, Michigan Corporate Income Tax of 6% (only with gross receipts of $350,000 or more; with the small business alternative credit effectively 1.8% while profit is up to $160,000) and 2% Detroit corporate tax. Dividends to you are qualified: 0 / 15 / 20% federal, plus 3.8% NIIT above $200,000, 4.25% Michigan and 2.4% Detroit tax.
Conditions
The US has no VAT; state and local sales taxes are not included.
Michigan's small business alternative credit (1.8%) applies only with gross receipts up to $20 million and a shareholder's share of business income up to $180,000; between $160,000 and $180,000 the credit is cut by 20–80%.
A single-member LLC can elect to be taxed as a corporation (Form 8832). An S corporation is not shown because it requires a reasonable salary for the owner.
Software development, IT services, consulting for companies and entrepreneurs.
IT consulting is a specified service trade or business (SSTB) for the 20% QBI deduction: it phases out between $201,750 and $276,750 of taxable income and is zero above that. Writing software without giving advice may not be an SSTB — the calculator treats this sector as consulting.
Michigan's 6% sales tax applies to sales of goods to final consumers; consulting services are not subject to it. Michigan has no local sales tax.
A corporation pays the same 21% federal tax in every sector; only the sole proprietor's QBI deduction depends on the sector.
Other business services draft — data being checked
Marketing, design, translation, engineering, bookkeeping and other professional services to companies.
Engineering, architecture, marketing, design and translation are not SSTBs: the full 20% QBI deduction up to $201,750 of taxable income, then a proportional reduction up to $276,750; above that, with no employee wages or property, the $400 minimum remains.
Accounting, law, actuarial science, financial services and consulting are SSTBs: for them the result under 'IT and consulting' applies.
Michigan sales tax does not apply to these services (it covers sales of goods); the 6% use tax reaches only a few services such as telecommunications and hotel stays.
Services to individuals draft — data being checked
Household services, repairs, beauty, tutoring, photography — for private customers.
Repairs, beauty, tutoring and photography are not SSTBs: the full 20% QBI deduction up to $201,750 of taxable income. Health services (e.g. physical therapists) and performing arts are SSTBs.
The services themselves are not subject to Michigan sales tax, but goods you sell to customers (parts, cosmetics) are taxed at 6% and require a sales tax license.
Trade in goods draft — data being checked
Retail and wholesale, including an online shop (excluding excise goods).
Trade is not an SSTB: the full 20% QBI deduction up to $201,750 of taxable income; above that the limit is 50% of employee wages or 2.5% of the original cost of business property (UBIA). The calculator assumes neither, so above $276,750 only the $400 minimum remains.
Retail sales to final consumers: 6% Michigan sales tax on the full price; you need a license from the Department of Treasury (valid 1 January – 31 December). Michigan has no city or county sales tax.
Selling to buyers in other states (online shop) may require registering for sales tax there — each state has its own rules; not included in the calculation.
Manufacturing draft — data being checked
Making and selling your own products: food, furniture, clothing, handmade goods.
Manufacturing is not an SSTB: the full 20% QBI deduction up to $201,750 of taxable income. Machinery and other business property raise the limit above that threshold (2.5% of their original cost, UBIA) — not included in the calculation.
Selling your products to final consumers means 6% Michigan sales tax and a sales tax license, as in trade.
A corporation pays the same 21% federal tax and 6% Michigan CIT in every sector.
Assumptions
One owner, tax resident of this country, no employees, no children, no other income; the business runs for the whole year.
Lives in Detroit, Michigan; single filer with the $16,100 standard deduction; state and city taxes are not itemized.
Consulting is treated as a specified service trade or business for §199A. Corporation: tax year is calendar 2026, all receipts are apportioned to Michigan and Detroit, dividends are qualified.
Company: the owner is the sole shareholder and director and takes no salary; profit after corporate tax is either paid out in full as dividends in the same year or kept in the company.
Expenses are documented business costs fully deductible in the year they are incurred; depreciation rules, prior-year losses and voluntary pension contributions are not modelled.
VAT (or GST/HST) and sales taxes are not included: they are passed on to clients and do not reduce profit.
§199A: the 'IT and consulting' sector is treated as a specified service trade or business (SSTB), other sectors are not; the business pays no W-2 wages and has no qualified property (UBIA = 0).
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