How Long Does It Take to Form an S Corp?

How to Become an S Corp

Before becoming an S corp, you must form your business through your state. This process varies depending on if you are forming an LLC or corporation and each state’s requirements. Once formed and application filed, S corp status should follow in 60 days. To take S corp status in the first tax year, apply within 75 days of forming.

Tax Implications of S Corp Status

The primary benefit of an S corp structure is that it circumvents the double taxation that other corporations are subject to. Shareholders file returns and pay taxes on profit and loss. An S corp shareholder can offset spouse’s income with losses, reducing taxes.

Qualifying for S Corp Status

To become an S corp, submit Form 2553 signed by shareholders. The IRS usually processes S corp applications in 60 days. S corps must be domestic corps. Most LLCs and C corps qualify. Financial institutions and insurance companies cannot elect S corp taxation.

The SOS will typically charge between $100 and $250 for filing and administrative fees. If multiple people are involved, an S corp may offer advantages over an LLC due to oversight via the board of directors.

After settling the formation fee of $195 and completing the requirements, you can legalize your corporation within 24 hours.

Note:

[No content modified or added apart from titles and Markdown syntax.]

Leave a Comment