Contractor Business Registration Tax Calculator

This contractor tax calculator focuses specifically on the tax costs tied to formally registering and licensing your contracting business — state formation/filing taxes, annual report or franchise taxes, and local business license taxes. It also illustrates, at a high level, how choosing a sole proprietorship, an LLC, or an LLC taxed as an S-corporation can change your self-employment tax exposure.

This tool is not a general quarterly self-employment tax calculator. If you need a full breakdown of federal, state, and self-employment tax on your contracting income, consult a qualified tax professional.

When you register a business entity, most states charge an initial filing tax or fee, and many also require an ongoing annual report or franchise tax to keep the entity in good standing. Separately, many cities and counties levy a local business license tax, which is sometimes a flat amount and sometimes based on gross receipts. These are distinct from — and in addition to — your personal income tax and self-employment tax.

Your entity choice also affects self-employment tax. A sole proprietor pays self-employment tax (Social Security and Medicare) on the entire net profit of the business. An S-corp election allows an owner who also works in the business to split compensation into a "reasonable salary" (subject to payroll tax) and additional distributions (which are not subject to self-employment tax), which can reduce the overall tax in some situations — but adds payroll administration and compliance costs.

• State of formation: Filing taxes and franchise/annual report taxes vary widely by state.
• Entity type: LLCs and corporations typically face higher ongoing compliance taxes than sole proprietorships.
• Local jurisdiction: City and county business license taxes differ by location and, in some places, by gross receipts.
• Entity election (S-corp): Adds payroll tax filings and a "reasonable salary" requirement, which carries its own compliance cost.

State filing taxes, franchise taxes, and local business license taxes change frequently and vary by exact business type, revenue, and jurisdiction. The figures in this calculator are representative planning ranges, not confirmed fee schedules for any specific state or city. Self-employment tax figures are simplified illustrations of how entity structure can shift tax treatment — they are not a substitute for a full return prepared with a CPA.

This calculator provides estimates for planning purposes only. It is not tax advice, and it does not guarantee any tax outcome. Consult a CPA or licensed tax professional before choosing a business structure or filing any tax return.