This process includes drafting essential documents and filing these documents with the IRS. Based on ContractsCounsel's marketplace data, the average cost of an S Corp is $1,200.
Key takeaway: To start your S-corp, fill out the articles of incorporation form with all your company's information and file Form 2553 through the IRS. To be eligible, your company must be based in the U.S. and have no more than 100 shareholders and one class of stock.
S corporations aren't without their advantages, however. One person can form an S corporation, while in a few states at least two people are required to form an LLC. Existence is perpetual for S corporations. Conversely, LLCs typically have limited life spans.
What paperwork is required to form an S corp? To form an S corp, you must prepare and file Articles of Incorporation or a Certificate of Incorporation with the proper state authorities. You must also pay filing fees and any applicable initial franchise taxes or other fees.
An S corporation is a special form of corporation, named after the relevant section of the Internal Revenue Code. It is taxed on a pass-through basis, meaning it doesn't pay taxes in its own right. In principle, an S corporation can have no employees.
If you meet IRS requirements, you can elect S-corp status by filing Form 2553, Election by a Small Business Corporation. If you file paperwork and complete the process within two months and 15 days after the beginning of the current tax year, you may be able to claim S-corp status for the current tax year.
S corp tax status is an attractive choice because it offers liability protection and tax savings while making it easier to transfer business interests. This federal status allows S corporation shareholders to avoid double taxation on any corporate income.
A husband and wife can count as one shareholder for the purposes of an S corporation. Individuals. Tax-exempt charitable organizations.
If there will be multiple people involved in running the company, an S Corp would be better than an LLC since there would be oversight via the board of directors. Also, members can be employees, and an S corp allows the members to receive cash dividends from company profits, which can be a great employee perk.
There are two main ways to start an S corp:By forming an LLC and electing S corp tax status from the IRS when you request your employee identification number (EIN)By forming a corporation and electing S corp status from the IRS.
The S corporation still has a responsibility to file an informational income tax return each year as well as a range of other IRS forms that relate to various other taxes it withholds from the wages it pays to employees.
You need to file Form 2553, Election by a Small Business Corporation to be treated as an S corporation by the IRS. You may file the form online, but only from the ElectSCorp website.