Can I change my LLC to an S corporation?

how to create an s corp

For help with choosing the right structure for your business , visit our Choosing a Business Structureguide. Cassie is a deputy editor, collaborating with teams around the world while living in the beautiful hills of Kentucky. She is passionate about economic development and is on the board of two non-profit organizations seeking to revitalize her former railroad town.

  • If you want your business to be taxed as an S corp, we recommend forming an LLC and then electing S corp taxation designation.
  • Electing S corp tax designation may provide tax benefits to business owners looking to withdraw money from their company for their personal use.
  • Both new businesses and long-lived companies can see serious tax advantages by electing S corporation status.
  • Electing S corp. taxation doesn’t convert your business structure from an LLC to a corporation.
  • You can use BizFilings’ service to incorporate your business and save money on attorney fees.

Unlike a C-corp, an S-corp is limited in who can invest in it. Here’s everything you need to know about operating a business in… Every state is different, so here are links to each state’s form. You can fill them in online or print them out, complete them and send them to the secretary of state’s office.

What are the benefits of creating an S corp?

This is usually “limited liability company” or an abbreviation of this, such as “LLC.” The allowable abbreviations vary by state. “S corp” refers to a tax status available to qualifying LLCs and corporations. It can have substantial tax benefits, depending on a variety of factors.

We’re among the fastest in the industry when it comes to filing your paperwork correctly and efficiently. We know your time is valuable, so our Business Specialists start working on your filing ASAP. Forming your S Corporation doesn’t need to be complex or time-consuming. With our easy online form, you can be done in as few as 10 minutes.

Preparing Articles of Incorporation for an S Corporation

The S corp tax status is used to reduce a business’s tax burden. Starting a business can be an exciting and complex experience. You may have a great new entrepreneurial idea or fantastic plans for marketing, but knowing which business entity type and legal tax status you should elect can leave you scratching your head. An S-corp, or S-corporation, is a tax status allowing business owners a flexible way to start small and grow. Both new businesses and long-lived companies can see serious tax advantages by electing S corporation status. You’ll also enjoy the risk-reducing liability protections offered by other common business structures.

What are the pros and cons of an S corporation?

  • S corporation advantages: pass-through taxation, limited liability protection and credibility. No federal taxes at the corporate level.
  • S corporation disadvantages: complicated obligations and stock-related restrictions. More corporate formalities and tax obligations.
  • Conclusion.

We’ll outline those criteria and the steps you would need to take to file as an S corporation if you decide that it’s right for your business. After choosing your business type, Articles of Incorporation must be filed with the state government and initial fees must be paid. After your Articles of Incorporation are filed, you need to file Form 2553 with the IRS to elect S corporation status for your company. With BizFilings’ Basic and Standard Incorporation Services, we will provide Form 2553 to you for you to finalize and submit to the IRS. Our Complete Incorporation Service includes an S Corporation Obtainment Service, where we interact with the IRS on your behalf to obtain S corporation status for your company.

Can you switch from an LLC to a corporation?

Each state has different requirements for filing articles of incorporation. Check with your state to find out what forms and information you should include. An attorney can help you prepare and file the articles of incorporation.

Although finding a small business accountant for your LLC can be tricky, it’s not nearly as challenging as doing your own LLC taxes. Finding the right person or firm is among the most critical early steps of launching your LLC. If you’re forming your LLC to access business loans more easily, check out reviews of the best business loans. Bylaws often include succession planning agreements to prevent business closure when a founder dies or an owner leaves the company.

Use of Brex Empower and other Brex products is subject to the Platform Agreement. File Form 2553 with the IRS after it’s been signed by all shareholders. The number of shareholders can’t exceed this limit at any point in the company’s existence.

How do I set up a new S Corp?

  1. Choose a business name for your S corp.
  2. File articles of incorporation.
  3. Issue stock for your S corp.
  4. Elect a board of directors and appoint officers.
  5. Meet other S corp eligibility requirements.
  6. Obtain an employer identification number.
  7. Elect S corp status.
  8. Apply for state and local S corp business licenses.

A certified tax professional can give you more definitive information for your circumstances. When you’re ready to take the leap, we can help you form an LLC with an S corporation designation and provide you with valuable support for all of your business needs moving forward. If the IRS determines that your salary isn’t reasonable, it has the authority to reclassify your non-wage distributions (which aren’t subject to employment taxes) to wages .

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