If you are thinking about starting your own business, you know that there are a lot of decisions to make. The first of which is what type of business structure you should have. Many small businesses consider becoming Subchapter S Corporations and for good reasons. This type of corporate structure can separate your personal assets from business liabilities, thus allowing you to protect your personal property. Additionally, an S corporation is not subject to the income taxes the Internal Revenue Service applies against C corporations.
If you or thinking about starting your own business or have any questions regarding the business formation process, contact the knowledgeable small business law attorneys at the Law Office of Carey Thompson, PC.
How do I form an S Corporation?
First, you will want to make sure that you really want to set up your business as an S corporation. Note that only individuals and trusts can own S corporations. Additionally, there are are important and specific restrictions regarding how S corporations can operate.
To form an S corporation, you must first prepare to file your Certificate of Formation and file it with the Secretary of State. The Business Organization Code sets fourth the requirements for this. You can usually find this information on the Secretary of State’s website. You will need the following information, at a minimum, for your Certificate:
- The corporation’s name (cannot be the same or “deceptively similar” to a company already in existence);
- The name and address of the person or company accepting service of process for the corporation;
- The name and address of the initial director(s);
- Number of shares to be issued;
- The corporation’s purpose; and
- Name and address of the person filing the Certificate.
Additionally, you will need a federal Employer Identification Number (EIN). You can apply for an EIN through the IRS website or by phone, mail, or fax. The IRS also requires you to file IRS form 2553 “Election of a Small Business Corporation” once you receive the duplicate copy of your Certificate of Formation.
Be sure to investigate any particular licenses that Texas law may require for you to conduct your business in the state. There may also be mandatory zoning and selling permits based on the city or county where you are conducting business.
Additionally other business entities besides corporations can elect Chapter “S” status for the purpose of Federal Income Tax. Limited Liability Companies and Limited Liability Partnerships may also file an S designation.
Starting Small Business Off On the Right Foot.
The importance of the formation stage for a small business cannot be understated. It can not only set the tone for the rest of your business dealings, but it can also mean the success or failure of your business as a whole. Make sure that you start your small business off on the right foot by consulting with the trusted small business law attorneys at the Law Office of Carey Thompson, PC. Our attorneys are here for all of your business formation needs. We take pride in knowing we work to help your small business succeed.