How to File an S Corp

Jump to Section

Need help with an S Corp?

Post Project Now

Post Your Project (It's Free)

Get Bids to Compare

 Hire Your Lawyer

What is an S Corp?

An S Corporation or S Subchapter is a type of legal entity formed to operate a business. S Corps are similar to both LLCs and C Corps , but what sets them apart from these other entities are specific characteristics required by the IRS to be considered an S Corp.

For a business qualify to be established as an S Corp, it must meet the following requirements dictated by the IRS:

  • S Corps cannot have more than 100 shareholders or owners
  • All owners must be US citizens or permanent residents
  • Other corporate entities cannot own S Corps
  • All S Corps must have a board of directors
  • There are required annual shareholder meetings
  • Must adhere to strict regulations on bylaws
  • Must adhere to strict regulations on issuing stock shares

If a company meets these standards and adheres to the IRS guidelines, an owner can establish their business as an S Corp.

For more information on the characteristics that shape an S Corp, click here.

Benefits of Filing as an S Corps

Like an LLC, S Corps protect business owners and shareholders from liability because they are considered a separate legal entity. Like a C Corp, an S Corp is an incorporated business. These similarities allow S Corps to benefit from advantages offered to both LLCs and Corporations.

S Corps can elect to be taxed as a pass-through entity . This means that business income and losses pass through the corporation and directly to shareholders. With pass-through taxation, S Corps avoid the double tax that C Corps must pay because they are not paying federal taxes at the corporate level.

Other notable benefits of an S Corp Include:

  1. Funding from investors: Like a C Corp, S Corps have the opportunity to secure funding from investors
  2. Shareholders as employees: Shareholders of an S Corp can legally be employees of the company and draw an employee salary in addition to receiving dividends and other tax-free distributions.
  3. Transferring interests without tax consequences: Unlike C Corps, owners can transfer interests or adjust property basis without tax consequences or complicated accounting rules under an S Corp.
  4. Credibility: Establishing an S Corp rather than an LLC, partnership, or sole proprietorship , carries more credibility. Incorporating a company shows commitment to shareholders, encouraging investors, suppliers, and customers to work with the business.

Read this article for more information about the advantages and disadvantages of filing as an S Corp.

How to File an S Corp

Forming an S Corporation can be complicated, and each state will have different processes and regulations. It is encouraged to seek the assistance of a corporate lawyer to file for an S Corporation.

If your company meets the requirements to incorporate as an S Corp, you can follow these steps to establish your company:

Step 1: Choose a name for your business: Every S Corp needs a unique name. Before filing your S Corp, run a search of corporations in your state to ensure that your business name isn't infringing on a name already in use.

Step 2: Elect a board of directors: The IRS mandates that S Corps have a board of directors. This is the governing body of the company and represents the shareholders. The IRS also requires that the board have regularly scheduled board meetings, and meeting minutes must be recorded.

Step 3: File your Articles of Incorporation: To establish an S Corp legally, the owner must file articles of incorporation with the IRS and the Secretary of State. Each state will have different business laws governing what needs to be included in articles of organization. You can consult with an experienced corporate lawyer to find out more about your state's regulations.

Step 4: Establish and file corporate bylaws: S Corp bylaws are strictly regulated by the IRS. The purpose of corporate bylaws is to establish how a company will be governed. They will include things like:

  • The process for electing or removing directors
  • How shares are sold
  • Frequency of board meetings
  • How shareholders will vote
  • Handling the death of a director

Step 5: Filing Form 2553 with the IRS: IRS Form 2553 is an election by a small business corporation. This allows your company to be taxed as an S Corp. If this form is not filed, your corporation will be taxed like a C Corp and will have to pay federal taxes at the corporate level.

Step 6: Appoint and file a registered agent: Some states require that S Corps appoint a registered agent for the company. The registered agent is responsible for accepting legal documents on behalf of the corporation. Some business owners hire registered agents from a private company to fill this role.

Meet some lawyers on our platform

Brad H.

3 projects on CC
View Profile

Michael K.

8 projects on CC
View Profile

Forest H.

31 projects on CC
View Profile

Donya G.

31 projects on CC
View Profile

Should You File as an S Corp?

When choosing the type of business entity to establish your company, it is important to weigh the pros and cons to decide which entity is best for your business goals.

Here are some questions to consider when choosing an S Corp:

  1. How many owners or shareholders do you plan to have?
  2. Will you be seeking outside investor financing?
  3. Do you want to maintain maximum control over your company?
  4. Do you expect your company to grow over time?

Discuss these questions with an experienced business attorney to help determine if you should file as an S Corp.

Although there are many advantages to establishing an S Corp like pass-through taxation, there are also disadvantages that should be considered before filing as an S Corp.

  • Certain states will not allow S Corporation income to be taxed on the owner's tax returns
  • S Corps have more expensive fees and maintenance costs than an LLC or sole proprietorship.
  • The IRS heavily regulates S Corps
  • The owner of the S Corp has less control than an owner of an LLC or sole proprietorship

S Corp vs. LLC

There are many similarities between S Corps and LLCs. Each of these business entities has advantages and disadvantages for owners. Choosing the right entity comes down to your business goals and determining what business structure will best fit your company's needs.

Liability Protection: Both S Corps and LLCs provide liability protection to the owners and shareholders. S Corps and LLCs are legally separate from the owners, so if a lawsuit is filed against the company, the owner's personal assets are protected.

Pass-Through Taxation: S Corps and LLCs are both taxed as pass-through entities. Neither of these business structures is required to pay corporate taxes. Instead, the owner reports earnings and losses on their personal tax return.

Requirements: LLCs are more simple and less expensive to file and establish than an S Corp. LLCs are not required to have an operating agreement , bylaws, board of directors, and many other aspects required for S Corps.

Outside Financing: When looking to secure investors for outside financing, S Corps have an advantage over LLCs. S Corps can offer investors stock in the company.

Flexibility: Because there are fewer regulations from the IRS, LLCs are the more flexible business option. An LLC allows an owner to maintain the most control over the company.

Get Help Creating an S Corp

Do you have questions about how to file an S Corp and want to speak to an expert? Post a project today on ContractsCounsel and receive bids from experienced corporate lawyers specializing in filing S Corporations.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

ContractsCounsel verified
Managing Member
38 years practicing
Free Consultation

I have been practicing law for 35 years. In addition to my law degree, I hold an MBA. I've created six companies, currently act as outside counsel to another 12, and have been an advisor to more than 500 startups and entrepreneurs.

ContractsCounsel verified
Business Contract Attorney & Arbitrator
21 years practicing
Free Consultation

I am a licensed and active Business Attorney, with over 20 years of diverse legal and business experience. I specialize in contract review, drafting, negotiations, ecommerce business transactions, breach of contract issues, contract dispute and arbitration. I am licensed to practice in New York and Connecticut. I am a FINRA and NCDS Arbitrator. My experience includes serving as General Counsel to small businesses. I negotiate, draft and review a wide array of commercial contracts; provide business strategy and employment advice and assist in the sale of businesses entities. I work extensively with various kinds of contracts. In reviewing agreements, I conduct risk analysis of contract and interpret the terms and conditions so that clients understand exactly what their obligations are under the agreement and are protected as much as the law requires. I am detailed and thorough in my review and drafting of agreements. Additionally, I advise clients on how to limit their liability and lower their contractual risk. I specialize in breach of contract issues and arbitration. I have been a Hearing Officer, presiding over cases and rendering written decisions; a Civil Court Arbitrator presiding over cases in contract law, commercial law, etc., a Judicial Clerk in Civil Court; a Vice President at an Investment Bank and an Attorney at top AML law firms.

ContractsCounsel verified
Attorney-at-law and Certified Public Accountant
25 years practicing
Free Consultation

Carlos Colón-Machargo is a fully bilingual (English-Spanish) attorney-at-law and Certified Public Accountant (CPA) with over twenty years of experience. His major areas of practice include labor and employment law; business law; corporate, contract and tax law; and estate planning. He is currently admitted to practice law in Georgia, Florida, the District of Columbia and Puerto Rico and currently licensed as a CPA in Florida. He received a Master of Laws from the Georgetown University Law Center in 1997, where he concentrated in Labor and Employment Law (LL. M. in Labor and Employment Law) and a Juris Doctor, cum laude, from the Inter American University.

ContractsCounsel verified
Attorney
10 years practicing
Free Consultation

Graduate of Georgetown Law (J.D. and LL.M in Taxation) Injury Claims Adjuster before law school for top insurer Eight plus years of legal experience Past roles: Associate at premier boutique law firm in the DC metro area Policy Associate at a large academic and research institution Solo Practice Areas of Expertise: Contracts Business Formation Trusts and Estates Demand Letters Entertainment Transactions

ContractsCounsel verified
Attorney
18 years practicing
Free Consultation

As a business law attorney serving Coral Springs, Parkland, and Broward County, FL, Matthew has been recognized as “AV” rated, which is the highest rating an attorney can achieve through Martindale’s Peer Review system. Year after year Matthew is listed in the “Legal Leaders” publication as a top-rated attorney in South Florida in the areas of litigation, commercial litigation, and real estate. Matthew is also a graduate and instructor of the Kaufman Foundation’s FastTrac NewVenture Program, presented by the Broward County Office of Economic and Small Business Development.

ContractsCounsel verified
Managing Partner
6 years practicing
Free Consultation

John Benemerito is the Founder and Managing Partner of Benemerito Attorneys at Law. Admitted to practice in New York and New Jersey, John represents small business owners and startups in the areas of Business and Securities Law. John received his Bachelors Degree at John Jay College of Criminal Justice where he majored in Criminal Justice. Afterwards, he attended New York Law School where he focused his studies on Corporate and Securities Law. John comes from a family of entrepreneurs. From as far back as he can remember he was always involved in his family’s numerous businesses. At the age of fifteen, John entered into a new business venture with his father and managed to grow and maintain that business through high school, college and law school.John is currently a co founder in over five different businesses. After law school, John decided that he wanted to help people like himself. He opened his own law practice and began working primarily with small business owners until he was introduced into the startup world. Ever since that time, John has worked with hundreds of startups and thousands of entrepreneurs from all different backgrounds in helping them achieve their goals. Having been an entrepreneur his entire life, John understands what it takes to create and maintain a successful business. He enjoys sitting down and working with his clients in figuring out each of their unique challenges.

ContractsCounsel verified
Attorney
11 years practicing
Free Consultation

California-based small business attorney handling matters related to securities, mergers & acquisitions, corporate governance, and other business transactions.

ContractsCounsel verified
Associate Attorney
6 years practicing
Free Consultation

I joined Enterprise Law Group, LLP as an Associate in March 2020. My practice has involved a wide range of legal matters from commercial real estate, finance and international business transactions to litigation matters including commercial disputes, personal injury and medical malpractice. Proficient in Spanish, I graduated from the University of Kentucky College of Law, the Patterson School of Diplomacy and International Commerce, and the University of Southern California. Prior to my legal career, I sought diverse professional experiences. After graduating from college, I orchestrated my own volunteering experience in southern Peru with a small non-profit organization. Later I gained valuable professional experience as part of a U.S. Senate campaign, and after that I joined the public policy team at Greater Louisville, Inc., Louisville's Chamber of Commerce affiliate. Prior to law school, I embarked on a month long excursion with the Northern Outdoor Leadership School in Alaska, which gave me a new found appreciation for sustainability.

ContractsCounsel verified
Managing Attorney
11 years practicing
Free Consultation

Agnes Mombrun Geter is the Founder and Managing Attorney of Mombrun Law, PLLC. She is an experienced attorney and is a member of the Florida Bar, New Jersey Bar, and the Pennsylvania Bar. The firm's practice focuses on Estate Planning, Business Law, and Debt Settlement including IRS Debt Relief. The firm's goal is to simplify the law and provide clients with the confidence and information necessary to make their decisions. The firm also provides project-based legal services to other attorneys and law firms, along with assisting as personal counsel and local counsel on legal matters.

ContractsCounsel verified
Solo Practioner
40 years practicing
Free Consultation

Have over 40+ years of corporate and commercial law experience.

ContractsCounsel verified
Business Attorney
19 years practicing
Free Consultation

I am a business attorney with years of experience advising individual entrepreneurs and small businesses on issues ranging from entity selection/formation to employment law compliance, to intellectual property protection and exploitation. I often act as General Counsel for my clients fulfilling the legal function as part of a team of managers. I look forward to learning more about your business and how I may be of assistance.

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call