Did you know that S corporations are the most popular type of corporation? Today, there are 4.6 million American companies that use the C corporation structure.
What is an S corp? It’s a type of business structure that lets you pass corporate income (as well as other things) through to shareholders. It pays less tax than other types of corporations, which is why it’s so popular.
So if you’re starting a business, then an S corp can be an ideal way to go. Read on to find out how to form an S corp!
Pick Your Business Name
This is the fun part, as you’ll get to pick a business name that represents what your company offers. Feel free to get creative, but you’ll want to also check that the name isn’t taken yet. You can do this by searching your state’s Secretary of State website.
If you’ve already got a good name in mind but aren’t ready to register your business just yet, know that you can reserve it in advance. That way, when you go to register, it won’t be taken.
You should also consider reserving a domain name, especially if you want to offer online products/services.
Get a Registered Agent
You’re required to have a registered agent or agent for service of process. They’re the ones who will receive your legal notices, correspondence, and tax notices.
Do note that you’ll have to list this person when you file your business’s Articles of Organization.
File Your Formation Documents
Next, you’ll have to file the necessary formation documents to get your business going. They include:
- Articles of Incorporation
- Articles of Formation
You’ll also need to provide your business name, business address, registered agent, and the members or board of directors.
Draft Corporate Bylaws
Corporate bylaws outline how your business operates. Not every state requires this, but it’s a good idea to draft them anyway. You can also draft operating agreements too.
File for Your Business Permits and Licenses
You’ll need to ensure you’ve got the right permits and licenses on local, state, and federal levels. You can use a business license report service to double-check exactly what you need to file.
Get Your EIN
“EIN” stands for “Employer Identification Number”. The last step in forming a corporation is getting an EIN, which the IRS will use for taxes. Not only that, but you need it to open a corporate bank account and hire staff.
If at any step you feel overwhelmed, you can enlist the help of business attorneys. Find more here about how they can assist.
Know How to Form an S Corp
Now that you know how to form an S corp, starting a business will be easy. You’ll be able to pursue your dream and make it a reality!
Just make sure that all your ducks are in a row and that you have realistic expectations. By knowing what to expect and working hard, you’ll be on your way to running a successful business.
Keep reading our blog page to find out more about business matters.