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Our instructions below for forming an LLC generally apply to most states, though. Most states require you to fill out a form, either online or on paper, to complete your Articles of Organization. To apply for S corp status, you’ll first need to create either an LLC or a corporation, if you haven’t already done so. Then, you’ll file an election form with the Internal Revenue Service . The 24- or 48-hour filing time is for the approval of the incorporation only.
States also typically require annual fees to maintain a corporation’s status. Because of the pass-through nature of an S-corp, all profits or losses flow directly to the shareholder at the end of each tax year. That means that even if no money has been paid out through a distribution, taxes must still be paid by the shareholder every year. However, once those taxes have been paid, any distribution would then be free from any future taxes.
The capital gains tax.
Verify that your name is available in your state — You can do this by performing a business entity search or name availability search with your state. Continue reading to learn how to start an S corp yourself, or save yourself the hassle and consider using a formation service like ZenBusiness to form your S corp. Once your Articles of Incorporation are complete, you will then file them with the California Secretary of State. The fee ranges from $30 to $100, depending on the type of business. You’ll need to appoint directors for your corporation—at least three if there will be three or more shareholders, or as many directors as shareholders if there will be fewer than three shareholders. Your directors can be your shareholders, and they do not have to be California residents.
If that happens, you’ll likely be required to file an amendment to your original Articles. We have an amendment filing service that can handle it for you, as well as our Worry-Free Compliance service, which includes two amendment filings https://kelleysbookkeeping.com/ every year. For most states, the registered agent is required to be available during normal business hours so they can receive notices in person. Other IRS restrictions, apart from ownership restrictions, also apply to S corporations.
Form an S Corporation (S Corp)
The information on our website is for general informational purposes only and is not legal advice. Use of the website is subject to our Terms of Service and Privacy Policy. Most states only require one director in order to start an S Corporation.