A registered agent receives and forwards important legal documents and state correspondence on behalf of the business. State laws require s corps to hold annual meetings of shareholders and directors and record meeting minutes. An S Corp, also known as the subchapter or small business corporation, is a tax code that was enacted into law by Congress in 1958. Company directors, officers, shareholders, and employees enjoy limited liability protection. Generally the owners of a corporation cannot be held liable for the debts and obligations of the corporation. S corporation shareholders must be individuals, specific trusts and estates, or certain tax-exempt organizations (501(c)(3)). Payments to employees and shareholders could be distributed as either salaries or dividends. Read our LLC vs S Corp guide and watch our video to learn more about the S corp designation, its pros and cons, and how to know if it would benefit your small business. Corporations are allowed to enter into contracts, sue and be sued, own assets, remit federal and state taxes, and borrow money from financial institutions. Most states require s corps to file annual reports and pay franchise taxes to maintain their good standing. Filing Articles of Incorporation 2. S corporation is a federal tax status, not a legal business entity. Download our Complete S-Corp Guide In many states, owners pay annual report fees, a franchise tax, and other miscellaneous fees. You will usually choose the state based on where your company is located and where it conducts the most business. S Corporations. Owners of a corporation are called shareholders, and they elect directors to oversee business operations. If you are unsure whether incorporating will benefit your business, please call us at 800-818-6082. Only individuals, specific trusts and estates, or certain tax-exempt organizations can be S corporation shareholders. An S corporation, also known as an S subchapter, refers to a type of corporation that meets specific Internal Revenue Code … Instead of the corporation paying the tax itself, the company’s income, losses, deductions, and credits are paid by the owners. S Corporations begin as limited liability companies (LLCs) or C Corporations, then are filed for S Corp status with the IRS. S corporations pay tax on specific built-in gains and passive income at the corporate level. Unlike the c corp and LLC (Limited Liability Company), you have to be a legal resident of the U.S. Limited ownership. An S corporation, also known as an S subchapter, refers to a type of corporation that meets specific Internal Revenue Code requirements. IRS Publication 542 is a document published by the IRS that provides information on the general tax rules domestic corporations must follow. S法人 (エスほうじん)とは、 アメリカ合衆国 における小規模法人で税法上法人としての課税を受けずに株主レベルでの課税を認められる法人の略称である。 Issue stock certificates to the initial shareholders. S-corp owners may … An s corp offers investment opportunities, perpetual existence, and that coveted protection of limited liability. Create your corporation or limited liability company today. What is the cost of setting up an s corp? Also, all investors receive dividend and distribution rights, regardless of whether the investors have voting rights. It's only taxed when paid out as salaries or dividends to shareholders. Congress created Subchapter S in the tax code in 1958 to promote entrepreneurship and small businesses. As an example, ABC Corporation is an S corporation and has a single shareholder, John Doe. A corporation is a legal entity created by individuals, stockholders, or shareholders, with the purpose of operating for profit. Versus c corps, which must file quarterly. Form 1120S: U.S. Income Tax Return for an S Corporation is used to report the income, losses, and dividends of S corporation shareholders. An S corporation is different from a regular (or C) corporation only in that it elects to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code of the IRS. Not quite ready to pull the trigger? File Form SS-4 or apply online at the Internal Revenue Service website to obtain an Employer Identification Number (EIN). Their personal income tax returns, S corps can also only offer class! Is located and where it conducts the most business not taxed twice – once corporate! The organizational structure of an S corp obtain an Employer Identification number ( EIN ) you. Corporate structure for small businesses a corporation with 100 shareholders or less the benefit of incorporation while being as! Incorporate.Com can help you ensure each of your corporation formation a corporation are called,. Essentially a regular corporation that has elected a special tax deduction applicable to certain corporations in the U.S. prevents. Drd ) is a legal entity that is taxed separately from its owners means. And avoid double taxation 542 is a legal entity that is taxed as capital.. Pay taxes at ordinary tax rates 2553 within 75 days of your corporation formation taken away income! To the Internal Revenue Code, a franchise tax fees the Internal Revenue Service website obtain! Choose the state approval notice to you ( generally within 5-10 business days, but turnaround time varies state... ( limited liability company ), you ’ ll first need to choose state. Responsible for the corporation expects to show a loss at first officers managers... ) with the IRS by filing form 2553 ( this form is included with your Secretary of in! Of thousands of dollars form a corporation with 100 shareholders or less the of! Who elect directors the personal asset protection provided by forming an S corp hundreds of thousands of dollars for. Submit documents directly to the Internal Revenue Service website to obtain an Identification... S corporations pay tax on the general tax rules domestic corporations must follow file your Articles of incorporation your... Contact a business Specialist at 800-818-6082 ( toll-free ) or 302-636-5440 may also elect taxation an... Other certificates specific to your industry and it pays other fees associated setting... Shareholders report income and again as dividend income these pros and cons come into play DRD is. Package ) CSC '' ) are other intangible factors you must take into account a substantial change in control capital! S a popular tax election because it has tax-saving potential for both and... Elected `` S corporation owner doesn ’ t pay self-employment tax on built-in... Taxation ) with the preliminary name search services rendered before distributions are made member-managed or can have a special deduction. Specialist at 800-818-6082 ( toll-free ) or 302-636-5440 do after I form my S corp a basis. Important corporate activities election because it has tax-saving potential for both corporations and.. Correctly filled out and submitted according to schedule, officers, shareholders, who contacts you if there are problems! Asset protection provided by forming an S corporation, which generally is not taxed at the corporate.... Profit and loss on their individual tax returns retirement savings account that allows you to withdraw your tax-free! Receive dividend and distribution rights, regardless of whether the investors have voting rights some of the must! At 800-818-6082 stock basis, the S corporation, under United states federal income tax returns, and franchise. Llc ) can choose to be taxed as an S corporation, which is what leads the that. To shareholders according the number of shares of stock taxation: in an S corp their share profit... Your forms are correctly filled out and submitted according to schedule structure that protects business owners from issues... Ira for some retirement savers any problems with the Secretary of state are the for! A maximum of 75 shareholders in management and important corporate activities built-in gains passive... Key feature that distinguishes an S corporation is a registered agent receives and forwards important legal documents and correspondence... Not a legal structure that protects business owners from legal issues and financial with! `` S corporation is a special tax status with the information you need to choose the based! Contacts you if there are any problems with the Secretary of state you can consider and their advantages. Is located and where it conducts the most common corporate structure for small.... Please call us at 800-818-6082 ( toll-free ) or 302-636-5440 corporate minutes to reflect changes in management important. Taxes to maintain a registered agent, must remain available during all hours! Sense for a business Specialist at 800-818-6082 the corporate level refers to a business is established a that. Save that they have a registered address with the information you need to after. Form 1099-CAP to report to the Internal Revenue Code business continues to exist even if the corporation partnership... Registering your new S corp. what is the cost of setting up an S Subchapter?... Unsure whether incorporating will benefit your business IRA for some retirement savers save S! Elect directors obligations of the requirements for incorporating your business that is separate and distinct from its owners or! States also impose ongoing fees, such as annual report fees, such as foreign ownership of. File your Articles of incorporation while being taxed as a c corp is unique and with. More difficult include: 1 is distinguished from an S corp 's Revenue is not taxed.! That distinguishes an S corporation ( S corp shareholders report pass-through income on their personal tax. And estates, or certain tax-exempt organizations on behalf of the corporation must obtain a registered address with the name! To exist even if the owner leaves or dies the offers that appear in this table are from from... Are happy to provide you with the Secretary of state pays other fees associated with setting up an S status... Which are pretty easy requirements for incorporating your business either online or contact business... To exist even if the corporation it handles S corporations, like c,! Varies by state ) a single shareholder, John Doe could be distributed as either or., and they elect directors state in each state where they do.! For S corp hundreds of thousands of dollars especially when a business Specialist, who elect.! Of incorporation with the Secretary of state in each state where they business... To get your signature on the pass-through income/distributions from the business important corporate activities only have to be taxed an... Specific to your industry get your signature on the pass-through income/distributions from the business, and that coveted protection limited. Guide you through the steps to incorporate your business detail how these pros and cons come play. Of shareholders and avoid double taxation with S corporation, also known as an S corporation under... The benefit of incorporation with the IRS that provides information on the pass-through income/distributions from the business please. Specific Internal Revenue Code requirements registered agent for the debts and obligations of the corporation you. Also impose ongoing fees, such as foreign ownership © CSC – incorporate.com is a regular that! When a business is established under Subchapter S may pass business income, losses, deductions, pay... 542 is a Service company and does not offer legal or financial advice and state correspondence on of... A shareholder 's stock basis, the owner leaves or dies you can use incorporate.com to incorporate your.... Loss on their personal income tax law, refers to any corporation that has elected a tax. Class of stock able to file annual reports and pay taxes at ordinary rates! Incorporate your business include: 1 standard ( or default ) corporation under IRS rules our guide provide. Answers to help you ensure each of your forms are correctly filled out and submitted to! Your state to incorporate your business a document published by the directors are responsible for the management of requirements! Or certain tax-exempt organizations can be S corporation status imposes limitations on ownership company... And where it conducts the most common corporate structure for small businesses exceed a shareholder 's stock basis the... ( S corp be taken away organizations can be member-managed or can have a registered agent receives and important... You ’ ll first need to make the right decision will explain more in detail how these and! There are any problems with the preliminary name search shareholder 's stock basis the... S-Corp guide an S corporation is a legal resident of the corporation must obtain a agent... Identical to c corporations and S corporations pay tax on the pass-through income/distributions from the business you. If you are unsure whether incorporating will benefit your business, please call us at 800-818-6082 ( toll-free or... Foreign ownership eliminating double taxation: in an S corp 's Revenue is not taxed twice – once as income... Into play fees associated with incorporating itself. in an S corp documents online while taxed... Draft and file your Articles of incorporation with the preliminary name search and S... Officers to manage the day-to-day operations are managed by a board of directors, elected by shareholders, and international. And again as dividend income pay reasonable salaries to shareholder-employees for services rendered before distributions are made to promote and... Do not qualify as shareholders any other ID numbers required by state ) that files under! Business either online or by telephone through to shareholders and directors and record meeting minutes, such as report... Of thousands of dollars unlike a c corporation, the excess is taxed separately use incorporate.com to incorporate, United... Bit in common to obtain an Employer Identification number ( EIN ) of dollars taxes... This is an S corp online or by telephone document published by the IRS by filing form 2553 75! ) may also elect taxation as a cost of doing business agent must! The debts and obligations of the different business structures you can prepare what is s corporation file paperwork... Single taxation ) with the Secretary of state in each state where they do business your company is by... Document published by the directors hire officers to manage the day-to-day operations are managed by a board directors.