Form S-Corp Key Terms

Learn more information on key elements to registering your business as an S-corp

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.

 

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

Copyright © 2011 Business.com, Inc. All Rights Reserved.

---