How to File an S Corp

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 4,036 reviews

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

Kristen R.

40 projects on CC
View Profile

Michael K.

70 projects on CC
View Profile

Don G.

27 projects on CC
View Profile

Jane C.

105 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

Orin K. on ContractsCounsel
View Orin
5.0 (3)
Member Since:
October 23, 2021

Orin K.

Partner
Free Consultation
Get Free Proposal
New York
19 Yrs Experience
Licensed in NY
New York Law School

I'm an employment lawyer. I counsel and represent employees in all professions, from hourly workers to doctors and executives, and all in between. I also counsel and represent employers in many aspects of employment law.

Abhijit "Beej" D. on ContractsCounsel
View Abhijit "Beej"
5.0 (1)
Member Since:
October 25, 2021
Scott S. on ContractsCounsel
View Scott
4.9 (14)
Member Since:
October 26, 2021

Scott S.

Attorney
Free Consultation
Get Free Proposal
New York, NY
16 Yrs Experience
Licensed in NY
Benjamin Cardozo School of Law

Scott graduated from Cardozo Law School and also has an English degree from Penn. His practice focuses on business law and contracts, with an emphasis on commercial transactions and negotiations, document drafting and review, employment, business formation, e-commerce, technology, healthcare, privacy, data security and compliance. While he's worked with large, established companies, he particularly enjoys collaborating with startups. Prior to starting his own practice in 2011, Scott worked in-house for over 5 years with businesses large and small. He also handles real estate leases, website and app Terms of Service and privacy policies, and pre- and post-nup agreements.

Reuben O. on ContractsCounsel
View Reuben
Member Since:
October 21, 2021

Reuben O.

Senior Managing Attorney
Free Consultation
Get Free Proposal
Seattle/Boise
14 Yrs Experience
Licensed in ID, WA
The University of Iowa

As an entrepreneur at heart, I enjoy working with business owners and executives on a variety of corporate matters, including mergers and acquisitions, corporate financing, corporate governance, public and private securities offerings, privacy regulation and early-stage corporate matters including formation. As a lawyer and business professional, I understand the value of providing personal service and focused legal answers to clients navigating a rapidly changing regulatory environment. Whether in Aerospace, Consumer Goods, or Technology, I find great success in work collaboratively with clients to strategical structure their business or implementing strategic growth-oriented financing opportunities.

Thaddeus W. on ContractsCounsel
View Thaddeus
Member Since:
October 22, 2021

Thaddeus W.

Principal
Free Consultation
Get Free Proposal
Los Angeles, Ventura County, New York City
26 Yrs Experience
Licensed in CA, NY
University of Notre Dame Law School

Experienced legal counsel to entrepreneurs, small businesses, and investors. Advising clients starting, buying, selling, operating, financing, and investing in businesses // U.S. Army Veteran // Ironman Triathlete, Marathoner, Open Water Swimmer, USAT Triathlon Coach // Lover of Dogs, Cribbage, Craft Beer, Bourbon, and Cigars

Nichole C. on ContractsCounsel
View Nichole
Member Since:
October 22, 2021

Nichole C.

Attorney
Free Consultation
Get Free Proposal
Kentucky
17 Yrs Experience
Licensed in KY
University of Louisville, Brandeis School of Law

Licensed attorney in KY and Federally JD, 2006 University of Louisville MBA, 2006 University of Louisville BS, 2001 Berea College Licensed Title Agent Arbitrator and Certified Mediator Business Consultant Adjunct Professor, Law and Business

Michelle F. on ContractsCounsel
View Michelle
Member Since:
January 24, 2022

Michelle F.

Attorney
Free Consultation
Get Free Proposal
New York
5 Yrs Experience
Licensed in NY
Touro College Jacob D. Fuchsberg Law Center

I provide comprehensive legal and business consulting services to entrepreneurs, startups and small businesses. My practice focuses on start-up foundations, business growth through contractual relationships and ventures, and business purchase and sales. Attorney with a demonstrated history of working in the corporate law industry and commercial litigation. Member of the Bar for the State of New York and United States Federal Courts for the Southern and Eastern Districts of New York, Southern and eastern District Bankruptcy Courts and the Second Circuit Court of Appeals. Skilled in business law, federal court commercial litigation, corporate governance and debt restructuring.

Steve C. on ContractsCounsel
View Steve
Member Since:
October 26, 2021

Steve C.

Principal | Attorney
Free Consultation
Get Free Proposal
Irvine
24 Yrs Experience
Licensed in CA
Loyola Law School

I am a corporate and business attorney in Orange County, CA. I advise start-ups, early-growth companies, investors, and entrepreneurs in various sectors and industries including technology, entertainment, digital media, healthcare, and biomedical.

Oscar B. on ContractsCounsel
View Oscar
Member Since:
October 28, 2021

Oscar B.

Attorney
Free Consultation
Get Free Proposal
Saint Petersburg, FL
21 Yrs Experience
Licensed in FL
Stetson University, College of Law

Oscar is a St. Petersburg native. He is a graduate of the University of Florida and Stetson University, College of Law. A former US Army Judge Advocate, Oscar has more than 20 years of experience in Estate Planning, Real Estate, Small Business, Probate, and Asset Protection law. A native of St. Petersburg, Florida, and a second-generation Gator, he received a B.A. from the University of Florida and a J.D. from Stetson University’s College of Law. Oscar began working in real estate sales in 1994 prior to attending law school. He continued in real estate, small business law, and Asset Protection as an associate attorney with the firm on Bush, Ross, Gardner, Warren, & Rudy in 2002 before leaving to open his own practice. Oscar also held the position of Sales & Marketing Director for Ballast Point Homes separately from his law practice. He is also a licensed real estate broker and owner of a boutique real estate brokerage. As a captain in the US Army JAG Corps, he served as a Judge Advocate in the 3rd Infantry Division and then as Chief of Client Services, Schweinfurt, Germany, and Chief of Criminal Justice for the 200th MP Command, Ft. Meade, Maryland. He is a certified VA attorney representative and an active member of VARep, an organization of real estate and legal professionals dedicated to representing and educating veterans. Oscar focuses his practice on real small business and asset protection law.

Rachael D. on ContractsCounsel
View Rachael
Member Since:
October 28, 2021

Rachael D.

Attorney
Free Consultation
Get Free Proposal
New York
11 Yrs Experience
Licensed in NY
Touro Law

We help simplify every transaction and provide a superior level of customer service to create long lasting and trusted relationships with our clients. Our goal is to guide our clients with practical and zealous legal representation and eliminate the difficult nature of any legal transaction.

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