How To Start An S-Corp

How to Start an S-Corp

An S-corporation is a type of business entity that offers its owners many tax advantages. Click here to find the advantages of an S-Corp business structure. In this section, we explain how to start an S-Corp.

Regestration of an S-Corp can be done yourself by visiting the Secretary of State website of your State, researching your local rules and regulations, and following the instructions on how to form an appropriate business entity. You can also start an S-corps by reaching out to our Business Formation Specialists at Business🚀Rocket for assistance. The team at Business Rocket has the knowledge and experience to file the documents on your behalf so you get the most benefits from whatever business structure is needed for your business.

To start an S-corp, you must follow these steps:

1. Choose a business name.
2. File articles of incorporation.
3. Issue stock.
4. Elect a board of directors and appoint officers.
5. Obtain an employer identification number (EIN).
6. Elect S-corp status.
7. Apply for state and local business licenses.
8. Create S-corp bylaws.
9. Schedule and hold annual meetings.

Steps to Start an S-Corp

1. Choose a business name.

Your business name must be unique and cannot be the same as any other business name in your state. You can search the Secretary of State’s website to find out if your desired business name is available.

2. File articles of incorporation.

Articles of incorporation are a legal document that officially creates your business. You can file your articles of incorporation with the Secretary of State’s office in your state.

3. Issue stock.

S-corporations must have at least one shareholder. You can issue stock to yourself or to other individuals or entities.

4. Elect a board of directors and appoint officers.

A board of directors is not required for an S-corporation, but it is a good idea to have one. The board of directors is responsible for overseeing the management of the business.

Officers are responsible for the day-to-day operations of the business. The most common officers are the president, vice president, secretary, and treasurer.

5. Obtain an employer identification number (EIN).

An EIN is a nine-digit number that is used by the IRS to identify businesses. You can apply for an EIN online or by mail.

6. Elect S-corp status.

To elect S-corp status, you must file Form 2553 with the IRS. You can file Form 2553 online or by mail.

7. Apply for state and local business licenses.

In addition to filing articles of incorporation with the Secretary of State, you may also need to apply for state and local business licenses. The requirements for business licenses vary from state to state and city to city.

8. Create S-corp bylaws.

S-corp bylaws are a set of rules that govern the operation of your business. Bylaws are not required, but they can help to avoid disputes among shareholders and officers.

9. Schedule and hold annual meetings.

S-corporations are required to hold annual meetings to elect directors and officers and to approve the annual budget.

Benefits of Starting an S-Corp

There are several benefits to starting an S-corporation, including:

• Pass-through taxation. The profits and losses of an S-corporation are passed through to the shareholders, who report them on their personal income tax returns. This can help to reduce the overall tax liability of the business.
• Limited liability. Shareholders of an S-corporation are only liable for the debts and liabilities of the business up to the amount of their investment. This means that your personal assets are protected in the event that the business fails.
• Flexibility. S-corporations have more flexibility than other types of business entities, such as C-corporations. For example, S-corporations can have fewer shareholders and can issue different classes of stock.

Conclusion

Starting an S-corporation can be a good option for small businesses that want to take advantage of the tax benefits and liability protection that S-corporations offer. However, it is important to carefully consider all of the factors involved before making a decision.

Call to Action

If you are considering starting an S-corporation, I recommend that you consult with an attorney or accountant to discuss your specific situation. They can help you to ensure that you are following all of the necessary steps and that you are taking advantage of all of the available benefits.

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