There are some things you need to know before you form S-Corp. Education and training starts with finding out more about S-Corp formation requirements and benefits. It can also include advanced training to help run an S-Corp, file taxes, or advise others about S-Corp and other incorporation.

An S-Corp is a form of incorporation that divides its income and losses among shareholders, instead of paying an income tax directly. They have the same liability protection as businesses that are organized into a partnership. There are several requirements that a company must meet to organize as an S-Corp, such as shareholder limits and characteristics. Corporations also have deadlines each year to file as an S-Corp.

There are other regulations that S-Corps must follow, including additional tax regulations. In some states and localities, including California and New York City, S-Corps must pay additional taxes. To get more knowledge about the formation of S-Corp businesses, do the following:

1. Find out more about the formation of S-Corp companies through articles and online guides.

2. Get books and worksheets that thoroughly explain S-Corp and other types of business organizing.

3. Enroll in advanced training to learn more about running an S-Corp and filing taxes.

Action Steps
The best contacts and resources to help you get it done

Get information from a form S-Corp provider or adviser

If you think your business is ready to go to S-Corp filing, read up on some of the requirements, benefits and drawbacks before making a decision. There is a wealth of basic information available online.

I recommend: First, get S-Corp information, including requirements and filing information, from the Internal Revenue Service. CPA-Resource, a division of Lorman Business Center, lists articles and information about S-Corp formation. The Company Corporation and NOLO also provide general facts and information about S-Corporations.

Read books about form S-Corp information

Choose a book when you want to do a more thorough analysis without enrolling in courses. Find one that gives the pros and cons of different types of business formations and includes worksheets and legal information.

I recommend: Choose the "Ultimate Book on Forming Corporations, LLCs, Sole Proprietorships and Partnerships," which offers tips and information from an experienced attorney. It’s available from Entrepreneur Press. Barrister Books offers "Incorporate Your Business: A Legal Guide to Forming a Corporation in Your State."

Enroll in advanced training to form or run an S-Corp company

Advanced training in business and taxes can be a boon to anyone who plans to run or advise and S-Corp. Besides standard business training at colleges and universities, many organizations provide online training. Self-paced courses are a good alternative for people who are busy running a business.

I recommend: MicroMash offers online courses about taxes and incorporation. Distance-Education provides search options and directories to help prospective students find the right business training programs. The site also includes a forum and other tools. WorldWideLearn offers courses for those interested in starting a business. H&R Block offers advanced tax training online courses for business owners and tax preparers. The Small Business Administration offers free online courses for business development and tax training.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Remember to stay up to date on filing and eligibility requirements for your S-Corp company. The IRS may change requirements from time to time, so it's helpful to do some refresher reading and research every year.

The guidelines required to form S-Corp companies are similar to those required to form C-Corp companies. An S-Corp company is simply a standard corporation legally recognized as an individual entity separate from its owners or shareholders. The primary difference between a C-Corp and the formation of S-Corp businesses is that to form S Corp companies, you need to choose a special tax status with the IRS.

The S-Corp is not required to pay taxes itself. With the formation of S-Corp companies, all individual owners are required to file personal tax returns to report any income or loss associated with the S-Corp company. Take the following steps to start an S-Corp company:

1. Explore benefits associated with the formation of S-Corp companies.

2. Determine if you qualify for S-Corp status.

3. Find a form S-Corp provider to help you incorporate your company.

Action Steps
The best contacts and resources to help you get it done

Review special tax advantages of S-Corp companies

S-Corp companies are generally audited less frequently. Business owners who form S Corp companies can also enjoy the structure of a standard corporation with pass-through taxation. A professional firm skilled in setting up the different types of businesses--S-Corp, C-Corp and LLC--can help you establish an S-Corp.

I recommend: Direct Incorporation offers information about the tax benefits associated with forming an S-Corp and offers assistance in filing required documents for S-Corp filings. The Company Corporation offers affordable fees and advice to help you form S-Corp company.

Seek professional advice about qualifying for S-Corp status

To be eligible for S-Corp status, there are specific criteria that business owners must meet. Criteria include strict ownership guidelines. For example, all owners of an S-Corp must be U.S. citizens and no owner can be recognized as other corporations, limited liability corporations or partnerships. Additionally, there are certain limitations on the type of business operations you can conduct under S-Corp status. An experienced form S-Corp provider can give you additional details about guidelines and your specific eligibility.

I recommend: CorpAmerica offers extensive form S-Corp information and an online order form, so you can quickly start your S-Corp company. IncorporateTime.com is a provider offering fast and reliable online services for forming an S-Corp.

File required paperwork to register S Corp status

To register S-Corp companies, you must file official documents, such as articles of incorporation with your state. In addition, you must also file all required tax documents. Be sure to seek professional business services to ensure you file all appropriate documentation in a timely and legal manner.

I recommend: MaxFilings helps businesses file all necessary paperwork associated with the formation of S-Corp companies. IncFile.com provides a range of packages to help individuals form S-Corp companies.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Be sure you have a thorough understanding of the guidelines with which you must comply as an S-Corp. For example, the formation of S-Corp status requires you to conduct meetings among all shareholders and owners. You must also record accurate corporate minutes of all critical business decisions made during these meetings.

In order for your business to have appropriate legal status, you must register it as a business entity. There are several options available, such as sole proprietorship, limited liability corporation and S-corp. An S-corp is legally recognized as a separate entity from its owners, organizers and shareholders.

In order to fully understand the process for filing for S-corp status, you need to know what some of the key terms involved with that filing mean.

Action Steps
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S-corp

The IRS derived the name S-corp, also known as Standard Corporation or S-corporation, because the tax provisions for this entity are listed under subchapter S of the Internal Revenue Code. According to IRS standards, this business entity registration gives your business the designation of a corporation, but also prevents double taxation of the business profits.

I recommend: Go directly to the source and find out more information on S-corps from the Internal Revenue Service.

C-corp

When applying for S-corp designation, it's important to understand what a C-corp is as well, since most S-corps start out that way. The IRS taxes the entity and owners of a C-corp, or C-corporation, separately under subchapter C of the Internal Revenue Code, resulting in double taxation of profits.

I recommend: BizFilings compares C-corp and S-corp on its website.

Articles of incorporation

In order to obtain any sort of business entity registration, you must file Articles of Incorporation with the Secretary of the State where the business is located. This documents explain the name of the corporation, its purpose for being in business, location, names of owners and directors and stock information.

I recommend: Obtain more information on Articles of Incorporation through FindLaw.

Shareholder

A shareholder is a person, company or other institution that owns at least one share in a company. In order for a business to meet the requirement for an S-corp, all shareholders must be individuals as opposed to a company or institution.

I recommend: Direct Incorporation provides information on shareholder requirements for registering your business as an S-corp.

Form 2553

One of several requirements for a business to go from the designation of a C-corp to that of an S-corp, is that all shareholders must sign IRS Form 2553, also known as Election by a Small Business Corporation. When shareholders sign their names to this form, they are consenting to the business status change to an S-corp.

I recommend: Corp America mentions Form 2553 in its explanation of an S-corp. The IRS provides more detail concerning the requirements of Form 2553.

EIN

All S-corps must have and maintain an EIN. EIN stands for Employer Identification Number. The EIN is also known as the Federal Employer Identification Number (FEIN) or the Taxpayer Identification Number (TIN).

I recommend: The frequently asked questions about S-corporation formation on Start Biz Here mentions EIN requirements.

Form S-Corp pricing and costs will vary based on the state in which you are starting your company and the services you require. One of the benefits of the formation of S-Corp companies is that establishing this type of business entity can help company owners avoid double taxation. Like a C-Corp, S-Corp business structures are viewed as individual entities, independent from the company’s shareholders.

State requirements for the formation of S-Corp companies include conducting state name checks, filing articles of incorporation and creating company bylaws and other corporate documents. The following tips will help you weigh your options by determining form S-Corp pricing and costs.

1. Obtain pricing information for naming your S-Corp.

2. Research state costs to register S-Corp entities.

3. Get a quote on Form S-Corp provider services.

Action Steps
The best contacts and resources to help you get it done

Research costs for naming your S-Corp

Naming your corporation is one of the most important steps in the formation of S-Corp entities. Because your name must be unique for your specific services/industry, you are required to conduct state name searches to ensure that the company name you have selected isn't already in use by a similar service provider. You pretty much have the freedom to choose whatever name you like, however states require that all corporation names end in 'corporation,' 'incorporated' or 'company.' You can also check and reserve corporation names directly with your local state department.

I recommend: Obtain a quote for conducting name availability checks from Sun Document Filings. Check out FindLegalForms to determine name reservation costs in your state.

Check out state form S-Corp filing fees

States charge fees to file all required S-Corp documentation in addition to fees associated with reserving your corporation name. Many states charge between $75 to $100, but it's best to check with your local state department to ensure you are aware of all filing fees associated with forming an S-Corp.

I recommend: Read more about filing fees for the formation of an S-Corp by visiting Incorporate Florida. You may also find out more about state fees by visiting TraderStatus.

Obtain quotes for the formation of S-Corp business entities

Professional services firms offer a range of options to help you form S-Corp company structures. You can choose to have them assist with some of the requirements or you can choose to obtain assistance with all of the requirements. Your price will increase depending upon the level of service you need. For example, basic filings could cost a little over $100, while complete services could cost more than $300.

I recommend: Find out more about pricing options for the formation of S-Corp business structures at MaxFilings. You may also consider obtaining a quote from The Company Corporation.