Wyoming S-Corp

Learn the Benefits of an S-Corp

When you decide to start a business, there are a number of business entities to choose from. Each has its own advantages and disadvantages, which we will introduce to you here. Prospective business owners should consult with professionals, such as a business attorney and accountants, before making the final decision. But educating yourself about the different types of corporations can help you assess what is the right business structure for you beforehand.

But first, are you ready to incorporate? It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Typically, “material size” means a business with revenue above $100,000. Once you know you’re ready, you have the option between choosing to classify your business as a C-Corporation or an S-Corporation. While S-Corps used to be the way to go for small businesses (it’s even been nicknamed the “Small BusinesS-Corporation”), thanks to the 2017 Tax Cuts and Jobs Act, C-Corps may now offer lower corporate tax rates to smaller business. Now, S-Corps are sometimes advisable for larger businesses. But keep in mind that C-Corps give you more options to expand and raise money, which can be very beneficial to a larger business. You may want to discuss the differences with a financial advisor or lawyer who can help break down all of the costs to help you assess what will work best for you.

Whether you choose to structure your business entity as a C or S-Corporation will determine how much you’ll pay in taxes, the ways you’re permitted to raise money, and the ease with which you can expand as your business grows. The standard and most common type of corporation is a C-Corporation. In fact, a C-Corp is the default type of corporation, and all S-Corps begin as a C-Corp or LLC. When you initially incorporate, your company will automatically become a standard C-Corp, and only after you file multiple forms can you transition to an S-Corp for federal tax purposes.

Why is an S-Corp a good idea for an e-commerce Business?

If there is an issue with a product, an S-Corp protects you. Compensation can only be taken from the S-Corp’s assets, not your personal assets.

Start Your S-Corp Now
transporter

How do you know which type of corporation you want to register your business as when they are both so similar? Both types of corporations offer owners protection from individual liability, so shareholders (and directors, officers, and employees) are typically not personally responsible for business debts. C-Corps and S-Corps require similar paperwork. In addition, both are owned by shareholders, have a Board of Directors with annual meetings, and are managed by executive officers. It is also a requirement that both types of corporations pay annual fees, set up bylaws, and issue stock. Basically, an S-Corporation is the legal equivalent of a regular C-Corporation. Both have the same rights. They just pays taxes differently.

But why opt for an S-Corp? What are the Wyoming corporation benefits, particularly a C-Corp?

The main difference between a C and S-Corporation is that an S-Corp is not treated as a disregarded entity. It is a pass-through tax entity. While a C-Corp’s tax attributes are determined at the entity level, an S-Corp determines its own income, deductions, credits, etc. It spreads out the tax attributes among its owners (or to its sole owner) as part of shared ownership. Likewise, within an S-Corporation, the profits are passed on to the shareholders, who are then taxed based on their personal returns. Unlike a C-Corporation, an S-Corporation is required to file an annual information tax return. A few other differences are that S-Corps must have no more than 100 shareholders (all individuals, not corporations), have only one class of stock, and be owned by U.S. citizens or resident aliens.

There are advantages to a Wyoming corporation formation. Registering as an S-Corporation offers you:

  • The ability to operate as a corporation even if the owner leaves the company or passes away.
  • Pass-through taxation, as owners report their share of the profits and losses on their individual tax returns.
  • A way out of being taxed twice, the way you would be in a C-Corporation. There is no double taxation occurring--once as income and again as dividend income. You save more money!
  • The opportunity to issue shares of stock to increase the value of your business.
  • A deduction of 20% of all S-Corp income on your personal tax return, which can significantly reduce your tax burden.
  • The ability to write off the S-Corp’s losses on shareholders’ individual tax returns.
  • Annual tax filing requirements, unlike C-Corps which must file every quarter.
  • Corporate status, which means shareholders, directors, and officers are protected from sharing liability as long as there is no evidence of fraud or other misdeeds

But there are a few disadvantages to starting an S-Corp. One of those is the fact that, unlike a C-Corp, there are restrictions on ownership if you start a Wyoming S-Corp. S-Corporations can only be owned by United States citizens or resident aliens. Additionally, an S-Corp permits only 100 shareholders, while for a C-Corp, there is no limit. But overall, the benefits far outweigh the setbacks, and an S-Corporation is an excellent choice for many entrepreneurs looking to start a business in Wyoming.

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Learn the Benefits of an S-Corp

Educating yourself about the different types of corporations can help you assess what is the right business structure for you. It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Decide on a Registered Agent

Just like the Wyoming LLC formation process, an S-Corp will also need to figure out who the Registered Agent for the corporation should be. The State of Wyoming requires every corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately. The Registered Agent will also act as the contact point between the Wyoming Secretary of State and the corporation. Once you assign someone as your Registered Agent, they can receive official correspondence and documents on behalf of your business.

A Registered Agent can be either an individual who is a resident of Wyoming or a business entity that is authorized to conduct business in the state (but not your own business). This can be you or someone else within your company, but keep in mind that this person will be through whom the state has contact with your business. This agent will receive legal documents (known as “Service of Process”) that pertain to your business. Your Registered Agent’s information would go on your most important Wyoming Secretary of State corporation forms.

Generally speaking, a Registered Agent in Wyoming must meet the following requirements:
  • Possess a physical street address located in Wyoming (no P.O. Box address).
  • Be available during regular business hours, typically Monday through Friday, 9 am to 5 pm.

Although the most comfortable option for a Wyoming Registered Agent would be to name yourself, a friend, or a family member, know that this information will be public record. Not only will the information be searchable on Wyoming’s Secretary of State website, it can also be republished on other sites as well. If you work from home and would much rather keep your home address private, this might not be the best choice. An alternative you can look into is hiring a Wyoming Registered Agent Service. While there are a variety of commercial Wyoming Registered Agent Services, for your convenience, we also offer a Registered Agent Service for a small charge that you can include as an add-on to your shopping cart.

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Decide on a Registered Agent

Just like the Wyoming LLC formation process, an S-Corp will also need to figure out who the Registered Agent for the corporation should be.

Obtain an Employer
Identification Number

Part of the Wyoming corporation formation process is filing with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Fortunately, you do not have to waste time dealing with the IRS on your own. Going through the IRS directly to get your EIN can be complicated, confusing, and frustrating. GovDocFiling alleviates the angst and aggravation of filing government documents, including apply for an EIN, or Tax ID number. Plus, GovDocFiling has one low price for same-day processing and delivery of your EIN (other Tax ID filing services charge more than $300 for same-day service!). Easily apply for your EIN/Tax ID online here. In addition, if you have any questions about obtaining an EIN, we offer 24/7 email and phone support to help you through the process. Emails are answered quickly at info@govdocfiling.com.

If you know your S-Corp will have employees, you also know that you will have to pay them. Plus, you will need to figure out the amount you should deduct from their wages for tax purposes. Employees will need to fill out a W-4 Form, and you will need to give them pay stubs with their tax information. Before this all gets overwhelming, keep in mind that we offer Payroll, Tax and HR compliance solutions with our partner, ADP. We make it easy to pay your employees, track time, and file taxes effortlessly. Plus, you and your employees can view and update payroll information via an app--accessible anywhere, anytime, backed by 24/7 live customer service support.

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Obtain an Employer Identification Number

Part of the Wyoming corporation formation process is filing with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Submit Your Articles
of Incorporation

To create an S-Corp in Wyoming, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of Wyoming. It establishes the basic elements of the corporation, such as the name and address of the corporation, the number and classes of stock, and certain indemnification provisions. Prior to filing, the Articles of Incorporation must be signed by each incorporator in order to authenticate it. The document can be repealed or amended with the approval of the Board of Directors.

If filing on your own, there are usually non-refundable fees that you have to pay with check or money order, additional fees for hand-delivery of forms, and long wait times whether in person or by mail--especially if you’re filing for an S-Corp during peak season. GovDocFiling can speed up the process for you. We offer an easy online application, expedited pricing, and a free business start-up guide and resources with all filings. You can apply here today.

Once your completed Wyoming Articles of Incorporation form is accepted, congratulations! Your company now exists as a recognized legal entity that is authorized to conduct business within the State of Wyoming.

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Submit Your Articles of Incorporation

To create an S-Corp in Wyoming, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of Wyoming.

Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your WY S-Corp. Basically, bylaws are rules of operation that create the company’s structure, ensuring that employees, shareholders, and executives are in the loop about how the business will be run.

Key points are covered in the corporate bylaws document, such as when annual meetings will be held, the size of your Board of Directors, and how this form will be amended if need be. In addition, member duties are explained and solutions to common disputes between parties are offered. Voting rights and salaries are discussed, and “what if” scenarios are presented. Having bylaws allows you to set up a structure that works for your business’s unique needs instead of adhering to default regulations within the state.

While bylaws are not required in some states, they are required in Wyoming. It is important to establish a set of bylaws that ensure your business runs smoothly. Filling out and filing this document prior to starting an S-Corporation in Wyoming provides protection for your business.

You can use this corporate bylaws generator to get a sense of what goes into a typical set of bylaws. To ensure it is done correctly, you can have a lawyer look over your bylaws prior to submission to ensure all necessary rules and scenarios are covered. Get legal advice from our partner Rocket Lawyer.

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Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your WY S-Corp.

Elect a Board of Directors

Wyoming law requires one or more director(s). The Board of Directors, while they are not involved in the daily tasks of running a business, represent or govern the corporation. Their duties include handling finances and fulfilling legal requirements, as well as determining the mission of the company.

People who do not work for your company can be a part of your Board of Directors. In fact, many businesses turn to lawyers or other business owners to fill in a spot on their Board of Directors. That way, they receive outside expertise from them, plus they may come with their own additional business contacts.

These board members must adhere to something called “the duty of loyalty,” which means that directors and officers of an S-Corporation can only make decisions without any personal economic conflict. The duty of loyalty is breached if something like a self-interested transaction occurs or a business opportunity is stolen. Plus, there is also the “duty of care” to consider. Members of the Board of Directors must make decisions that are in the best interests of the corporation at all times. For example, making a decision that causes serious losses for the shareholders would mean they are in violation of their duty of care--and they can be sued for this.

Your board members will have to hold meetings to make important decisions, such as issuing shares or amending something in the Articles of Incorporation. The Board of Directors typically receives equal voting rights (some states, like Delaware, are an exception) when making these decisions. During the first meeting of the S-Corporation's Board of Directors, directors can appoint officers, decide on bylaws, select a corporate bank, and more. All subsequent meetings must be held annually, though, of course, if more are needed, more can be held.

Minutes of the meeting, which is the recorded documentation of what was discussed or what happened during a meeting, must be recorded to exhibit transparency in business operations, but they do not need to be filed with the state. Instead, these should be kept with your other corporate records, such as Articles of Incorporation and bylaws. These documents should be saved for at least seven years in order to protect your company.

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Elect a Board of Directors

First, familiarize yourself with the roles within an S-Corporation. There are three groups:

  • Shareholders
  • Board of Directors
  • Officers

Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything--if there are multiple shareholders and directors. If a corporation has only one shareholder or director, the decision-making, of course, falls on that person without the need for a group meeting. Officers, on the other hand, do not operate in groups. An officer holding the position of president, chief executive officer, or treasurer, for example, is an agent of the corporation and has the authority to act on behalf of the corporation on his or her own. Within smaller S-Corps, directors are sometimes also officers and shareholders. In that case, even though the same person is serving in multiple roles, each role has very different responsibilities and is treated as such.

Shareholders are the owners of the corporation, and they elect the Board of Directors. The directors, in unison, oversee and direct corporation affairs and make business decisions. They employ officers who carry out the Board of Directors’ decisions. Officers are responsible for the day-to-day operations of the company. An officer can be terminated by the Board of Directors at any time. Wyoming requirements state that there should be as many officers as stated in the bylaws, but a minimum of one. One person may hold multiple offices. If there are multiple officers, one officer is responsible for maintaining all corporate records.

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Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything - if there are multiple shareholders and directors.

Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt. Unlike taking out a business loan, you do not pay interest that eats at your profits each month. The value of your business assets can be assessed by taking a look at what amount of your business assets are owned by shareholders vs. lenders. Corporations that have a higher proportion of the company owned by lenders makes an investment in the business appear riskier. If shareholders do invest in your business and purchase stock, keep in mind that if your business fails, you would have to pay back your loans and shareholders.

While there are many advantages to issuing stock, keep in mind that shareholders have an ownership stake in the company. This means that they have certain rights, such as the ability to participate in voting and the assurance that they will be collecting dividends. Profits will be shared and decisions will have to be made in unison. The more stock you issue to shareholders, the smaller your ownership in the business (and the less of a say you have in business major business decisions). On the plus side, when your business grows, you can buy out the other shareholders and get your ownership back.

Issuing stock is not a requirement for S-Corporations, but a privilege that you can make use of if you choose. Doing so can help you fund your business if you are growing and have large, expensive projects planned in the near future. In that case, you can decide how much capital you need and figure out how many shares you’d like to issue and at what price per share. You will already have a number for how many shares you have to offer (that was decided when you filed your Articles of Incorporation). To properly assess the accurate value of each share, determine your company’s net worth first. This will help you figure out what percentage of ownership you believe each share is worth.

Typically, appointed Board of Directors can issue stock whenever and to whomever, as long as the recipient has a brokerage account and is over 18 years old. But within an S-Corp, there are a few more limitations that a C-Corp does not have. While C-Corporations can be owned by any individual or legal entity--foreign or domestic--S-Corporations can only be owned by United States citizens or resident aliens. On top of that, an S-Corp does not allow an unlimited number of shareholders. It maxes out at 100. Also, S-Corps are not permitted to be owned by a C-Corp, another S-Corp, an LLC, a partnership, or many trusts. Lastly, unlike in a C-Corp where shareholders have the option between different stock classes (common, preferred, income, value, growth), an S-Corp only permits one stock class (common).

Another thing that can limit you here is if you’ve chosen to classify your S-Corp as a private corporation. This is typically a smaller corporation where the stock isn't offered to the public. A publiC-Corporation is authorized to sell their stock to the public, while a private company can’t trade its share on public stock exchanges. But a private corporation is not always small. Many big companies are privately held--such as Dell, Koch Industries, Deloitte, and Cargill. It can be harder for private corporations to raise funds, but it can be important in order to maintain family ownership.

Whoever your corporation may sell stock to, it’s important to have a shareholder agreement for protection. This would explain the shareholder’s rights and voting power within the S-Corporation. You will want to decide and let you shareholders know what kind of say they have in the organization or management of the company when they are issued stock. Like most states, Wyoming requires an annual shareholder meeting.

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Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt.

Familiarize Yourself with the
State’s Taxes and Licenses

Income from pass-through entities, such as a Wyoming Limited Liability Company and Wyoming S-Corp, “passes through” the business to the owners, who are required to report this information on their personal tax returns. In that case, each individual S-Corp member would then have to pay taxes on his or her share of the S-Corp’s income.

Good news for prospective Wyoming S-Corp owners: not only does having an S-Corp means that you do not owe state income taxes, but Wyoming also don’t doesn’t have a personal income tax! Even if you choose to open a Wyoming C-Corporation, you are still in the clear, as Wyoming does not tax corporate income either. But there are other various taxes an S-Corp must pay. For example, if you have employees, you will have to pay an employer tax, and if your business sells goods or services, you will have to pay a sales and use tax. The sales tax in Wyoming is approximately 5.42%, which is fairly low when compared to other states--for example, Tenneesse’s sales tax is 9.47%.

In addition, there may be extra fees for certain insurances, permits, and licenses, depending on the state’s laws and the type of business you own. For example, you may need worker’s compensation, unemployment insurance, building permits, etc. All of the aforementioned can be found in an organized list on the Wyoming Secretary of State website. Find out the requirements for S-Corps in the state you plan to run your business in. Keep in mind that different cities or counties may require certain permits and licenses that other regions do not. Contact your city or county to see if there are any insurances, permits, or licenses you might need to obtain before you begin operating your business.

One of the main Wyoming corporation benefits--instead of a Wyoming LLC--is that your business saves money on self-employment taxes. The owners of an S-Corp do not pay self-employment taxes on salaries they are paid by the corporation.

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Familiarize Yourself with the State’s Taxes and Licenses

Income from pass-through entities, such as a Wyoming Limited Liability Company and Wyoming S-Corp, “passes through” the business to the owners, who are required to report this information on their personal tax returns. In that case, each individual S-Corp member would then have to pay taxes on his or her share of the S-Corp’s income.

File an Annual Renewal

Like most states, the State of Wyoming requires all S-Corp owners to file a report that updates all the information that the Wyoming Secretary of State has on file. This is called the Annual Report and it is submitted every year. Each Annual Report is due by the first day of the registration anniversary month, along with a fee that varies depending on assets. For example, it is $50 for businesses with less than $250,000 in Wyoming assets. View this worksheet from the WY Secretary of State for more details. There is an additional $2-$9 convenience fee when filing online.

Wyoming corporation filing - Annual Reports included - is available online on the Wyoming Secretary of State website. Filing an Annual Report is necessary for maintaining an active status after starting an S-Corp in Wyoming. Not filing the report or paying the fee will result in being presented a Wyoming corporation dissolution form, after which the state will dissolve your business.

Annual Reports can be rather complex–requiring the deciphering of gross receipts, dividends, interest, losses, and all Wyoming corporation fees–and you should seek the help of an accountant to ensure that it is filled out properly Our partner, Bench, will provide you with a team of accountants to help you with your franchise tax reports, as well as general bookkeeping services with monthly financial statements and intuitive software to monitor your business profits and expenses.

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File an Annual Renewal

Like most states, the State of Wyoming requires all S-Corp owners to file a report that updates all the information that the Wyoming Secretary of State has on file. This is called the Annual Report and it is submitted every year. Each Annual Report is due by the first day of the registration anniversary month, along with a fee that varies depending on assets.

Raise Funds for Your Corporation

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business. Some of the most commonly-used options for obtaining funding for your S-Corp are:

  • Personal savings and assets
  • Informal loans from family and friends
  • Peer-to-peer lending sites or crowdfunding
  • Conventional bank loan
  • Short-term credit card loans
  • Government-sponsored grants/loan programs
  • Issuing stock to shareholders
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Personal Saving/Assets

Use your own savings, liquidate your assets, refinance your home, borrow your Roth IRA, etc.

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Informal Loans From Family/Friends

Ask friends or family members if they would be willing to invest in your business.

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Peer-to-Peer Landing Sites

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

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Conventional Bank Loan

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

Many new S-Corporation owners begin with their savings to fund their new business venture. If your savings are not enough, you may need to look into liquidating your personal assets or use them as collateral for loans. Can you sell your property or refinance your home? Do you have a retirement account such as a Traditional or Roth IRA? Usually, you can withdraw contributions you made to your IRA anytime, tax- and penalty-free, but that is not always the case. Find out what kind of fees your particular retirement plan will hit you with before using your IRA to fund your business.

Next, look into whether you know someone who shares your passion for your business and has the ability to contribute financially to your dream. These personal connections may want to support your startup idea. Although accepting an informal loan from a close friend or relative may feel safe, you should still protect yourself in case your relationship with the friend or family member goes sour. Have an official contract drawn up that all parties agree to. You can choose to have it notarized and have witnesses present for extra protection.

If you prefer not to borrow from friends and family, you can turn to a peer-to-peer (P2P) or social lending website. A P2P site is a place where investors seek out alternative opportunities to invest outside of stocks and bonds. You can apply for a loan and investors can decide whether or not they wish to fund your proposed business through interest-based loans. You can also look into crowdfunding, which is a way for small businesses or startups to raise money online through donations. These options typically require the ability to promote your business well, ensure complete transparency of where the funds go, and sometimes, the possibility of giving up ownership of a piece of your business. Make sure you look into all of the specifics.

You might be hoping to rely on a conventional loan from a bank, credit union or other lending institution for your main source of funds. In this case, you would need a formal business plan to present during your loan application process. If approved, you would be required to sign a legal contract, or a Promissory Note, outlining your obligations to the lender (which would primarily entail regular payments until the loan is paid off). If you are a first-time business owner, it is likely that you may be rejected initially. In that case, you can improve your application and reapply, or look into alternative sources of funding such as short-term financing via credit cards.

Using a credit card as a means of obtaining a fast and easy business loan would grant you use of immediate funds without the hassle and paperwork of loan applications or business plans. This is the best option for a brand new business, and we work with Nav to give our customers access to the credit they need. Visit our financing page and fill out the form for more information.

There are many credit cards that have low or no annual fees, low introductory interest rates, and other rewards depending on your spending. But be careful: make sure you pay back your credit card before the promotional low interest rate expires and skyrockets, or prior to having to pay large annual fees. And don’t make large purchases that can take years to pay back. For example, getting an equipment loan to purchase a piece of equipment is smarter than putting it on a credit card. Credit cards can be a good temporary solution if your business plan will allow you to pay back the debt quickly.

Another option at your disposal is a government-sponsored grant or loan program. Traditional lenders can turn to federal, state, or local governments to finance their business if such a grant or program is available. Typically, these programs consider sponsoring specific type of businesses or certain business owners, so be sure to research what government-sponsored loan your particular business or you might be eligible for.


Lastly, you can invite people to your team. S-Corporations may have a single person as the company's owner, or an unlimited number of shareholders participating in the ownership of the business. If you could see your businesses strategy succeeding with a partner or multiple partners, pool together your financial resources with another member to support your startup. An advantage to this funding option is your partner(s) may come with their own social network of business contacts and possibly even their own potential investors. To protect yourself, you can adjust your bylaws and ensure that you are still the primary owner of your Wyoming S-Corporation.

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Raise Funds for Your S-Corp

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business.

Create a Business Website

Creating a website for your Wyoming business is not a requirement but it is recommended to any business owner operating in the modern world. An online presence is important to have and maintain in order to ensure that your customers trust your company and know they will receive good customer service. Having a website gives your business legitimacy; your customers will visit your website and see that you are a real company with an actual website where they can read about the company’s origin and products/services and access contact information. Being able to read up on a company on their website leads to trust between a consumer and an organization. Also, dependable customer service is often offered through a website. By offering an email address, a contact form, and/or live chat with a representative on your website, you are making it easy for a customer to get connected with someone knowledgeable about the product/service. That allows a customer to know that there is a real person who cares about their satisfaction within the company that they are doing business with.

Start S-Corp formation

If the website is outdated or there is no website, a consumer may feel that you are not a legitimate business but a scam with no licenses to back up your business’ operations. You can avoid losing customers due to not having a professional website by ensuring that you have one. We work with GoNorth Websites to provide new businesses with high quality, cost-effective websites. Find out more about our custom designed, written, and developed websites, plus optional internet marketing add-ons that help you grow your business.

But websites needs maintenance too. You can’t simply have one created and never update it throughout the years. Policies and terms change, companies grow, products/services improve, and all of that (and more) can be reflected on the website. This keeps your customers up-to-date and offers a personal touch that is valued by any consumer.

In addition, you can look into having a blog or utilizing social media as another means of keeping your customers in-the-know and offering them a way to interact with your company. An online and/or social media presence can also lead to responsive customers who can offer you feedback on how you’re doing—plus, it’ll help get your company’s name out there.

If this all sounds like more than you’d like to deal with on your own, know that you can hire someone to maintain your website and social media presence for you—just like you can hire customer representatives to handle all correspondence. You can employ a web agency to monitor your website and/or a social media marketing agency to manage your social media campaign. A social media campaign is a coordinated marketing plan that can assist you with your business goals, which translates into extra advertising for your new business. Marketing your company can help you have a more profitable business and can aid you with paying back your business loans quicker—something any business owner aims for. Regardless of industry, all businesses should consider having a website as part of the first steps of starting a business.

The Benefits of Having an Online Presence
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You will show your customers that you are a legitimate business and build trust.
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Your company will be easy to correspond with and you can provide good, responsive customer service.
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Your customers will be kept up-to-date on all exciting news related to your business.


If you’ve decided that you want to have a website for your business, keep a few things in mind. When coming up with a website name, make sure that the domain contains your business name and is easy to type and remember for future visits. If you come up with a great web domain that you’d like to use for your business but you don’t plan to create a business website today, you may want to buy the URL to prevent others from acquiring it.

While brainstorming website URLs for your website, you’re going to either realize that you already know what your business is going to be named or that you have no idea what or how to name your business. Here are a few Wyoming corp name tips:

  • Follow S-Corp naming guidelines. A corporation’s name usually has to include words, like Corporation, Incorporated, Company, or Limited; or abbreviations, like Corp., Inc., Co., or Ltd. It’s also important not to use any words or phrases that will make it easy for someone to mistake your company for a federal agency; think “State Department.”
  • Find a unique name. If you’re getting an S-Corp in Wyoming you will need an original name that is not in use by another corporation. To check if a name has already been taken, you can search the Business Name Availability Database.
  • Make sure it is available as a web domain. This way, you can find out if another company outside of Wyoming has a corporation with the same name. In that case, think of something more original.
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Create a Business Website

Creating a website for your Wyoming business is not a requirement but it is recommended to any business owner operating in the modern world.

Begin Operating Your Business

Once you become an official Wyoming corporation, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings. This is mandatory if you don’t want your new business to run into any issues. If you’d rather not do these tasks yourself, you can sign up for a service that will automatically send you alerts ahead of crucial state and federal filing deadlines. Likewise, you can hire an accountant, a tax professional, and/or an attorney to ensure you are not making errors when keeping records, filling out paperwork, and making payments.

Next, make sure you’ve obtained all necessary permits, licenses, and insurances that your WY corp might need — and you’re good to go! Begin operating your Wyoming business with peace of mind, knowing that you are protected by an S-Corp in case anything unforeseeable affects your new business venture.

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Begin Operating Your Business

Once you become an official Wyoming corporation, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings.


Wisconsin S-Corp

Learn the Benefits of an S-Corp

When you decide to start a business, there are a number of business entities to choose from. Each has its own advantages and disadvantages, which we will introduce to you here. Prospective business owners should consult with professionals, such as a business attorney and accountants, before making the final decision. But educating yourself about the different types of corporations can help you assess what is the right business structure for you beforehand.

But first, are you ready to incorporate? It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Typically, “material size” means a business with revenue above $100,000. Once you know you’re ready, you have the option between choosing to classify your business as a C-Corporation or an S-Corporation. While S-Corps used to be the way to go for small businesses (it’s even been nicknamed the “Small BusinesS-Corporation”), thanks to the 2017 Tax Cuts and Jobs Act, C-Corps may now offer lower corporate tax rates to smaller business. Now, S-Corps are sometimes advisable for larger businesses. But keep in mind that C-Corps give you more options to expand and raise money, which can be very beneficial to a larger business. You may want to discuss the differences with a financial advisor or lawyer who can help break down all of the costs to help you assess what will work best for you.

Whether you choose to structure your business entity as a C or S-Corporation will determine how much you’ll pay in taxes, the ways you’re permitted to raise money, and the ease with which you can expand as your business grows. The standard and most common type of corporation is a C-Corporation. In fact, a C-Corp is the default type of corporation, and all S-Corps begin as a C-Corp or LLC. When you initially incorporate, your company will automatically become a standard C-Corp, and only after you file multiple forms can you transition to an S-Corp for federal tax purposes.

Why is an S-Corp a good idea for an e-commerce Business?

If there is an issue with a product, an S-Corp protects you. Compensation can only be taken from the S-Corp’s assets, not your personal assets.

Start Your S-Corp Now
transporter

How do you know which type of corporation you want to register your business as when they are both so similar? Both types of corporations offer owners protection from individual liability, so shareholders (and directors, officers, and employees) are typically not personally responsible for business debts. C-Corps and S-Corps require similar paperwork. In addition, both are owned by shareholders, have a Board of Directors with annual meetings, and are managed by executive officers. It is also a requirement that both types of corporations pay annual fees, set up bylaws, and issue stock. Basically, an S-Corporation is the legal equivalent of a regular C-Corporation. Both have the same rights. They just pays taxes differently.

But why opt for an S-Corp? What are the benefits of setting up your Wisconsin business as an S-Corp?

The main difference between a C and S-Corporation is that an S-Corp is not treated as a disregarded entity. It is a pass-through tax entity. While a C-Corp’s tax attributes are determined at the entity level, an S-Corp determines its own income, deductions, credits, etc. It spreads out the tax attributes among its owners (or to its sole owner) as part of shared ownership. Likewise, within an S-Corporation, the profits are passed on to the shareholders, who are then taxed based on their personal returns. Unlike a C-Corporation, an S-Corporation is required to file an annual information tax return. A few other differences are that S-Corps must have no more than 100 shareholders (all individuals, not corporations), have only one class of stock, and be owned by U.S. citizens or resident aliens.

There are advantages to setting up your business as a Wisconsin S-Corp. Registering as an S-Corporation offers you:

  • The ability to operate as a corporation even if the owner leaves the company or passes away.
  • Pass-through taxation, as owners report their share of the profits and losses on their individual tax returns.
  • A way out of being taxed twice, the way you would be in a C-Corporation. There is no double taxation occurring--once as income and again as dividend income. You save more money!
  • The opportunity to issue shares of stock to increase the value of your business.
  • A deduction of 20% of all S-Corp income on your personal tax return, which can significantly reduce your tax burden.
  • The ability to write off the S-Corp’s losses on shareholders’ individual tax returns.
  • Annual tax filing requirements, unlike C-Corps which must file every quarter.
  • Corporate status, which means shareholders, directors, and officers are protected from sharing liability as long as there is no evidence of fraud or other misdeeds

But there are a few disadvantages to starting an S-Corp. One of those is the fact that, unlike a C-Corp, there are restrictions on ownership if you create a Wisconsin S-Corp. S-Corporations can only be owned by United States citizens or resident aliens. Additionally, an S-Corp permits only 100 shareholders, while for a C-Corp, there is no limit. But overall, the benefits far outweigh the setbacks, and an S-Corporation is an excellent choice for many entrepreneurs looking to start a business in Wisconsin.

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Learn the Benefits of an S-Corp

Educating yourself about the different types of corporations can help you assess what is the right business structure for you. It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Submit Your Certificate of Incorporation

To create an S-Corp in Wisconsin, you will also need to register your business by filling out and submitting the Certificate of Incorporation--usually called the Articles of Incorporation in most other states. The Certificate of Incorporation is a form that should be filed (and maintained) with the state of Wisconsin. It establishes the basic elements of the corporation, such as the name and address of the corporation, the number and classes of stock, and certain indemnification provisions. Prior to filing, the Certificate of Incorporation must be signed by each incorporator in order to authenticate it. The document can be repealed or amended with the approval of the Board of Directors.

If filing on your own, there are usually non-refundable fees that you have to pay with check or money order, additional fees for hand-delivery of forms, and long wait times whether in person or by mail--especially if you’re filing for an S-Corp during peak season. GovDocFiling can speed up the process for you. We offer an easy online application, expedited pricing, and a free business start-up guide and resources with all filings. You can apply here today.

Once your completed Wisconsins Certificate of Incorporation form is accepted, congratulations! Your company now exists as a recognized legal entity that is authorized to conduct business within the State of Wisconsins.

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Submit Your Certificate of Incorporation

To create an S-Corp in Wisconsin, you will also need to register your business by filling out and submitting the Certificate of Incorporation--usually called the Articles of Incorporation in most other states. The Certificate of Incorporation is a form that should be filed (and maintained) with the state of Wisconsin.

Decide on a Registered Agent

Next, figure out who the Registered Agent for your S-Corp should be. The State of Wisconsin requires every S-Corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately. The Registered Agent will also act as the contact point between your S-Corp and the Secretary of State’s office. Once you assign someone as your Registered Agent, they can receive official correspondence and documents on behalf of your business. 

A Registered Agent can be either an individual who is a resident of Wisconsin or a business entity that is authorized to conduct business in the state (but not your own business). This can be you or someone else within your company, but keep in mind that this person will be through whom the state has contact with your business. This agent will receive legal documents (known as “Service of Process”) that pertain to your business. You are legally required to have one.

Generally speaking, a Registered Agent in Wisconsin must meet the following requirements:
  • Possess a physical street address located in Wisconsin (no P.O. Box address).
  • Be available during regular business hours, typically Monday through Friday, 9 am to 5 pm.

Although the most comfortable option for a Registered Agent would be to name yourself, a friend, or a family member, know that this information will be public record. Not only will the information be searchable on the state of Wisconsin’S-Corporation website, it can also be republished on other sites as well. If you work from home and would much rather keep your home address private, this might not be the best choice. An alternative you can look into is hiring a Wisconsin Registered Agent Service. We also offer a Registered Agent Service for a small charge that you can include as an add-on to your shopping cart.

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Decide on a Registered Agent

Next, figure out who the Registered Agent for your S-Corp should be. The State of Wisconsin requires every S-Corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately.

Obtain an Employer
Identification Number

Next, your Wisconsin S-Corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Fortunately, you do not have to waste time dealing with the IRS on your own. Going through the IRS directly to get your EIN can be complicated, confusing, and frustrating. GovDocFiling alleviates the angst and aggravation of filing government documents, including apply for an EIN, or Tax ID number. Plus, GovDocFiling has one low price for same-day processing and delivery of your EIN (other Tax ID filing services charge more than $300 for same-day service!). Easily apply for your EIN/Tax ID online here. In addition, if you have any questions about obtaining an EIN, we offer 24/7 email and phone support to help you through the process. Emails are answered quickly at info@govdocfiling.com.

If you know your S-Corp will have employees, you also know that you will have to pay them. Plus, you will need to figure out the amount you should deduct from their wages for tax purposes. Employees will need to fill out a W-4 Form, and you will need to give them pay stubs with their tax information. Before this all gets overwhelming, keep in mind that we offer Payroll, Tax and HR compliance solutions with our partner, ADP. We make it easy to pay your employees, track time, and file taxes effortlessly. Plus, you and your employees can view and update payroll information via an app--accessible anywhere, anytime, backed by 24/7 live customer service support.

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Obtain an Employer Identification Number

Next, your Wisconsin S-Corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your S-Corporation. Basically, bylaws are rules of operation that create the company’s structure, ensuring that employees, shareholders, and executives are in the loop about how the business will be run.

Key points are covered in the corporate bylaws document, such as when annual meetings will be held, the size of your Board of Directors, and how this form will be amended if need be. In addition, member duties are explained and solutions to common disputes between parties are offered. Voting rights and salaries are discussed, and “what if” scenarios are presented. Having bylaws allows you to set up a structure that works for your business’s unique needs instead of adhering to default regulations within the state.

While bylaws are required in some states, they are not required in Wisconsin. Nevertheless, it is important to establish a set of bylaws that ensure your business runs smoothly. Filling out and filing this document prior to starting an S-Corporation in Wisconsin provides protection for your business.

You can use this corporate bylaws generator to get a sense of what goes into a typical set of bylaws. To ensure it is done correctly, you can have a lawyer look over your bylaws prior to submission to ensure all necessary rules and scenarios are covered. Get legal advice from our partner Rocket Lawyer.

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Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your S-Corporation.

Elect a Board of Directors

Wisconsin law requires one or more director(s). The Board of Directors, while they are not involved in the daily tasks of running a business, represent or govern the corporation. Their duties include handling finances and fulfilling legal requirements, as well as determining the mission of the company.

People who do not work for your company can be a part of your Board of Directors. In fact, many businesses turn to lawyers or other business owners to fill in a spot on their Board of Directors. That way, they receive outside expertise from them, plus they may come with their own additional business contacts.

These board members must adhere to something called “the duty of loyalty,” which means that directors and officers of an S-Corporation can only make decisions without any personal economic conflict. The duty of loyalty is breached if something like a self-interested transaction occurs or a business opportunity is stolen. Plus, there is also the “duty of care” to consider. Members of the Board of Directors must make decisions that are in the best interests of the corporation at all times. For example, making a decision that causes serious losses for the shareholders would mean they are in violation of their duty of care--and they can be sued for this.

Your board members will have to hold meetings to make important decisions, such as issuing shares or amending something in the Articles of Incorporation. The Board of Directors typically receives equal voting rights (some states, like Delaware, are an exception) when making these decisions. During the first meeting of the S-Corporation's Board of Directors, directors can appoint officers, decide on bylaws, select a corporate bank, and more. All subsequent meetings must be held annually, though, of course, if more are needed, more can be held.

Minutes of the meeting, which is the recorded documentation of what was discussed or what happened during a meeting, must be recorded to exhibit transparency in business operations, but they do not need to be filed with the state. Instead, these should be kept with your other corporate records, such as Articles of Incorporation and bylaws. These documents should be saved for at least seven years in order to protect your company.

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Elect a Board of Directors

First, familiarize yourself with the roles within an S-Corporation. There are three groups:

  • Shareholders
  • Board of Directors
  • Officers

Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything--if there are multiple shareholders and directors. If a corporation has only one shareholder or director, the decision-making, of course, falls on that person without the need for a group meeting. Officers, on the other hand, do not operate in groups. An officer holding the position of president, chief executive officer, or treasurer, for example, is an agent of the corporation and has the authority to act on behalf of the corporation on his or her own. Within smaller S-Corps, directors are sometimes also officers and shareholders. In that case, even though the same person is serving in multiple roles, each role has very different responsibilities and is treated as such.

Shareholders are the owners of the corporation, and they elect the Board of Directors. The directors, in unison, oversee and direct corporation affairs and make business decisions. They employ officers who carry out the Board of Directors’ decisions. Officers are responsible for the day-to-day operations of the company. An officer can be terminated by the Board of Directors at any time.

Wisconsin requirements state that there should be as many officers as stated in the bylaws--but at least a minimum of one. One person may hold multiple offices.

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Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything - if there are multiple shareholders and directors.

Issue Stock to your Shareholders

One of the benefits of having a Wisconsin S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt. Unlike taking out a business loan, you do not pay interest that eats at your profits each month. The value of your business assets can be assessed by taking a look at what amount of your business assets are owned by shareholders vs. lenders. Corporations that have a higher proportion of the company owned by lenders makes an investment in the business appear riskier. If shareholders do invest in your business and purchase stock, keep in mind that if your business fails, you would have to pay back your loans and shareholders.

While there are many advantages to issuing stock, keep in mind that shareholders have an ownership stake in the company. This means that they have certain rights, such as the ability to participate in voting and the assurance that they will be collecting dividends. Profits will be shared and decisions will have to be made in unison. The more stock you issue to shareholders, the smaller your ownership in the business (and the less of a say you have in business major business decisions). On the plus side, when your business grows, you can buy out the other shareholders and get your ownership back.

Issuing stock is not a requirement for S-Corporations, but a privilege that you can make use of if you choose. Doing so can help you fund your business if you are growing and have large, expensive projects planned in the near future. In that case, you can decide how much capital you need and figure out how many shares you’d like to issue and at what price per share. You will already have a number for how many shares you have to offer (that was decided when you filed your Articles of Incorporation). To properly assess the accurate value of each share, determine your company’s net worth first. This will help you figure out what percentage of ownership you believe each share is worth.

Typically, appointed Board of Directors can issue stock whenever and to whomever, as long as the recipient has a brokerage account and is over 18 years old. But within an S-Corp, there are a few more limitations that a C-Corp does not have. While C-Corporations can be owned by any individual or legal entity--foreign or domestic--S-Corporations can only be owned by United States citizens or resident aliens. On top of that, an S-Corp does not allow an unlimited number of shareholders. It maxes out at 100. Also, S-Corps are not permitted to be owned by a C-Corp, another S-Corp, an LLC, a partnership, or many trusts. Lastly, unlike in a C-Corp where shareholders have the option between different stock classes (common, preferred, income, value, growth), an S-Corp only permits one stock class (common).

Another thing that can limit you here is if you’ve chosen to classify your S-Corp as a private corporation. This is typically a smaller corporation where the stock isn't offered to the public. A publiC-Corporation is authorized to sell their stock to the public, while a private company can’t trade its share on public stock exchanges. But a private corporation is not always small. Many big companies are privately held--such as Dell, Koch Industries, Deloitte, and Cargill. It can be harder for private corporations to raise funds, but it can be important in order to maintain family ownership.

Whoever your corporation may sell stock to, it’s important to have a shareholder agreement for protection. This would explain the shareholder’s rights and voting power within the S-Corporation. You will want to decide and let you shareholders know what kind of say they have in the organization or management of the company when they are issued stock. Wisconsin requires an annual shareholder meeting.

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Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt.

Familiarize Yourself with the
State’s Taxes and Licenses

A C-Corporation is taxed as a separate entity and must report any profits or losses on a corporate tax return. Shareholders are not taxed on the corporation's profits - they report and pay income taxes only on what they are paid by the corporation. Wisconsin individual income tax rates vary from 4.00% to 7.65%.

There are also other various taxes. For example, Wisconsin has a sales and use tax rate of 5%, but additional county taxes may also apply. Paying the sales and use tax requires a permit from the Wisconsin DOR. For more information about this particular permit, you can contact any local Department of Revenue office or call (608) 266-2776.

In addition, there may be extra fees for certain insurances, permits, and licenses, depending on the state’s laws and the type of business you own. Depending on your type of business, you may need worker’s compensation, unemployment insurance, building permits, etc. Most Wisconsin business licenses can be found on the State of Wisconsin Department of Agriculture, Trade, and Consumer Protection website. Keep in mind that different cities or counties may require certain permits and licenses that other regions do not. Contact your city or county to see if there are any insurances, permits, or licenses you might need to obtain before you begin operating your business.

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Familiarize Yourself with the State’s Taxes and Licenses

A C-Corporation is taxed as a separate entity and must report any profits or losses on a corporate tax return. Shareholders are not taxed on the corporation's profits - they report and pay income taxes only on what they are paid by the corporation.

File an Annual Renewal

Like most states, the State of Wisconsin requires all S-Corporation owners to file an Annual Report. Unlike most states, it is not payable to the Wisconsin Secretary of State (SOS), but instead, the Wisconsin Department of Financial Institution (WDFI). It is due each year by the end of the registration anniversary quarter. You can file online on Wisconsin’s One Stop Business Portal website. Online filing costs $25. Printing and mailing the report has a fee increase of $40. Filing this form is necessary for maintaining an active business status. Not filing the report or paying the fee will result in being presented a Wisconsin corp dissolution form, after which the state will dissolve your business.

The report can be rather complex – requiring the deciphering of gross receipts, dividends, interest, losses, etc. – and you should seek the help of an accountant to ensure that it is filled out properly. Our partner, Bench, will provide you with a team of accountants to help you with your franchise tax reports, as well as general bookkeeping services with monthly financial statements and intuitive software to monitor your business profits and expenses.

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File an Annual Renewal

Like most states, the State of Wisconsin requires all S-Corporation owners to file an Annual Report. Unlike most states, it is not payable to the Wisconsin Secretary of State (SOS), but instead, the Wisconsin Department of Financial Institution (WDFI). It is due each year by the end of the registration anniversary quarter.

Raise Funds for Your Corporation

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business. Some of the most commonly-used options for obtaining funding for your S-Corp are:

  • Personal savings and assets
  • Informal loans from family and friends
  • Peer-to-peer lending sites or crowdfunding
  • Conventional bank loan
  • Short-term credit card loans
  • Government-sponsored grants/loan programs
  • Issuing stock to shareholders
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Personal Saving/Assets

Use your own savings, liquidate your assets, refinance your home, borrow your Roth IRA, etc.

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Informal Loans From Family/Friends

Ask friends or family members if they would be willing to invest in your business.

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Peer-to-Peer Landing Sites

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

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Conventional Bank Loan

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

Many new S-Corporation owners begin with their savings to fund their new business venture. If your savings are not enough, you may need to look into liquidating your personal assets or use them as collateral for loans. Can you sell your property or refinance your home? Do you have a retirement account such as a Traditional or Roth IRA? Usually, you can withdraw contributions you made to your IRA anytime, tax- and penalty-free, but that is not always the case. Find out what kind of fees your particular retirement plan will hit you with before using your IRA to fund your business.

Next, look into whether you know someone who shares your passion for your business and has the ability to contribute financially to your dream. These personal connections may want to support your startup idea. Although accepting an informal loan from a close friend or relative may feel safe, you should still protect yourself in case your relationship with the friend or family member goes sour. Have an official contract drawn up that all parties agree to. You can choose to have it notarized and have witnesses present for extra protection.

If you prefer not to borrow from friends and family, you can turn to a peer-to-peer (P2P) or social lending website. A P2P site is a place where investors seek out alternative opportunities to invest outside of stocks and bonds. You can apply for a loan and investors can decide whether or not they wish to fund your proposed business through interest-based loans. You can also look into crowdfunding, which is a way for small businesses or startups to raise money online through donations. These options typically require the ability to promote your business well, ensure complete transparency of where the funds go, and sometimes, the possibility of giving up ownership of a piece of your business. Make sure you look into all of the specifics.

You might be hoping to rely on a conventional loan from a bank, credit union or other lending institution for your main source of funds such as the Wisconsin Bankers Mortgage Corp. In this case, you would need a formal business plan to present during your loan application process. If approved, you would be required to sign a legal contract, or a Promissory Note, outlining your obligations to the lender (which would primarily entail regular payments until the loan is paid off). If you are a first-time business owner, it is likely that you may be rejected initially. In that case, you can improve your application and reapply, or look into alternative sources of funding such as short-term financing via credit cards.

Using a credit card as a means of obtaining a fast and easy business loan would grant you use of immediate funds without the hassle and paperwork of loan applications or business plans. This is the best option for a brand new business, and we work with Nav to give our customers access to the credit they need. Visit our financing page and fill out the form for more information.

There are many credit cards that have low or no annual fees, low introductory interest rates, and other rewards depending on your spending. But be careful: make sure you pay back your credit card before the promotional low interest rate expires and skyrockets, or prior to having to pay large annual fees. And don’t make large purchases that can take years to pay back. For example, getting an equipment loan to purchase a piece of equipment is smarter than putting it on a credit card. Credit cards can be a good temporary solution if your business plan will allow you to pay back the debt quickly.

Another option at your disposal is a government-sponsored grant or loan program. Traditional lenders can turn to federal, state, or local governments to finance their business if such a grant or program is available. Typically, these programs consider sponsoring specific type of businesses or certain business owners, so be sure to research what government-sponsored loan your particular business or you might be eligible for.


Lastly, you can invite people to your team. S-Corporations may have a single person as the company's owner, or an unlimited number of shareholders participating in the ownership of the business. If you could see your businesses strategy succeeding with a partner or multiple partners, pool together your financial resources with another member to support your startup. An advantage to this funding option is your partner(s) may come with their own social network of business contacts and possibly even their own potential investors. To protect yourself, you can adjust your bylaws and ensure that you are still the primary owner of the S-Corp.

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Raise Funds for Your S-Corp

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business.

Create a Business Website

Creating a website for your business is not a requirement but it is recommended to any business owner operating in the modern world. An online presence is important to have and maintain in order to ensure that your customers trust your company and know they will receive good customer service. Having a website gives your business legitimacy; your customers will visit your website and see that you are a real company with an actual website where they can read about the company’s origin and products/services and access contact information. Being able to read up on a company on their website leads to trust between a consumer and an organization. Also, dependable customer service is often offered through a website. By offering an email address, a contact form, and/or live chat with a representative on your website, you are making it easy for a customer to get connected with someone knowledgeable about the product/service. That allows a customer to know that there is a real person who cares about their satisfaction within the company that they are doing business with.

Start S-Corp formation

If the website is outdated or there is no website, a consumer may feel that you are not a legitimate business but a scam with no licenses to back up your business’ operations. You can avoid losing customers due to not having a professional website by ensuring that you have one. We work with GoNorth Websites to provide new businesses with high quality, cost-effective websites. Find out more about our custom designed, written, and developed websites, plus optional internet marketing add-ons that help you grow your business.

But websites needs maintenance too. You can’t simply have one created and never update it throughout the years. Policies and terms change, companies grow, products/services improve, and all of that (and more) can be reflected on the website. This keeps your customers up-to-date and offers a personal touch that is valued by any consumer.

In addition, you can look into having a blog or utilizing social media as another means of keeping your customers in-the-know and offering them a way to interact with your company. An online and/or social media presence can also lead to responsive customers who can offer you feedback on how you’re doing—plus, it’ll help get your company’s name out there.

If this all sounds like more than you’d like to deal with on your own, know that you can hire someone to maintain your website and social media presence for you—just like you can hire customer representatives to handle all correspondence. You can employ a web agency to monitor your website and/or a social media marketing agency to manage your social media campaign. A social media campaign is a coordinated marketing plan that can assist you with your business goals, which translates into extra advertising for your new business. Marketing your company can help you have a more profitable business and can aid you with paying back your business loans quicker—something any business owner aims for. Regardless of industry, all businesses should consider having a website as part of the first steps of starting a business.

The Benefits of Having an Online Presence
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You will show your customers that you are a legitimate business and build trust.
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Your company will be easy to correspond with and you can provide good, responsive customer service.
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Your customers will be kept up-to-date on all exciting news related to your business.


If you’ve decided that you want to have a website for your business, keep a few things in mind. When coming up with a website name, make sure that the domain contains your business name and is easy to type and remember for future visits. If you come up with a great web domain that you’d like to use for your business but you don’t plan to create a business website today, you may want to buy the URL to prevent others from acquiring it.

While brainstorming website URLs for your website, you’re going to either realize that you already know what your business is going to be named or that you have no idea what or how to name your business. Here are a few Wisconsin corp name tips:

  • Follow S-Corp naming guidelines. A corporation’s name usually has to include words, like Corporation, Incorporated, Company, or Limited; or abbreviations, like Corp., Inc., Co., or Ltd. It’s also important not to use any words or phrases that will make it easy for someone to mistake your company for a federal agency; think “State Department.”
  • Find a unique name. If you’re getting an S-Corp in Wisconsin you will need an original name that is not in use by another corporation. To check if a name has already been taken, you can search the Wisconsin Name Database.
  • Make sure it is available as a web domain. This way, you can find out if another company outside of Wisconsin has a corporation with the same name. In that case, think of something more original.
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Create a Business Website

Creating a website for your Wisconsin business is not a requirement but it is recommended to any business owner operating in the modern world.

Begin Operating Your Business

Once you become an official S-Corporation in the state of Wisconsin, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings. This is mandatory if you don’t want your new business to run into any issues. If you’d rather not do these tasks yourself, you can sign up for a service that will automatically send you alerts ahead of crucial state and federal filing deadlines. Likewise, you can hire an accountant, a tax professional, and/or an attorney to ensure you are not making errors when keeping records, filling out paperwork, and making payments.

Don’t forget to make sure you’ve obtained all necessary permits, licenses, and insurances that your WI corp might need—and you’re good to go! Begin operating your Wisconsin business with peace of mind, knowing that you are protected by an S-Corp in case anything unforeseeable affects your new business venture.

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Begin Operating Your Business

Once you become an official S-Corporation in the state of Wisconsin, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings.


West Virginia S-Corp

Learn the Benefits of an S-Corp

When you decide to start a business, there are a number of business entities to choose from. Each has its own advantages and disadvantages, which we will introduce to you here. Prospective business owners should consult with professionals, such as a business attorney and accountants, before making the final decision. But educating yourself about the different types of corporations can help you assess what is the right business structure for you beforehand.

But first, are you ready to incorporate? It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Typically, “material size” means a business with revenue above $100,000. Once you know you’re ready, you have the option between choosing to classify your business as a C-Corporation or an S-Corporation. While S-Corps used to be the way to go for small businesses (it’s even been nicknamed the “Small BusinesS-Corporation”), thanks to the 2017 Tax Cuts and Jobs Act, C-Corps may now offer lower corporate tax rates to smaller business. Now, S-Corps are sometimes advisable for larger businesses. But keep in mind that C-Corps give you more options to expand and raise money, which can be very beneficial to a larger business. You may want to discuss the differences with a financial advisor or lawyer who can help break down all of the costs to help you assess what will work best for you.

Whether you choose to structure your business entity as a C or S-Corporation will determine how much you’ll pay in taxes, the ways you’re permitted to raise money, and the ease with which you can expand as your business grows. The standard and most common type of corporation is a C-Corporation. In fact, a C-Corp is the default type of corporation, and all S-Corps begin as a C-Corp or LLC. When you initially incorporate, your company will automatically become a standard C-Corp, and only after you file multiple forms can you transition to an S-Corp for federal tax purposes.

Why is an S-Corp a good idea for an e-commerce Business?

If there is an issue with a product, an S-Corp protects you. Compensation can only be taken from the S-Corp’s assets, not your personal assets.

Start Your S-Corp Now
transporter

How do you know which type of corporation you want to register your business as when they are both so similar? Both types of corporations offer owners protection from individual liability, so shareholders (and directors, officers, and employees) are typically not personally responsible for business debts. C-Corps and S-Corps require similar paperwork. In addition, both are owned by shareholders, have a Board of Directors with annual meetings, and are managed by executive officers. It is also a requirement that both types of corporations pay annual fees, set up bylaws, and issue stock. Basically, an S-Corporation is the legal equivalent of a regular C-Corporation. Both have the same rights. They just pays taxes differently.

But why opt for an S-Corp? What are the benefits of setting up your state of West Virginia business as an S-Corp?

The main difference between a C and S-Corporation is that an S-Corp is not treated as a disregarded entity. It is a pass-through tax entity. While a C-Corp’s tax attributes are determined at the entity level, an S-Corp determines its own income, deductions, credits, etc. It spreads out the tax attributes among its owners (or to its sole owner) as part of shared ownership. Likewise, within an S-Corporation, the profits are passed on to the shareholders, who are then taxed based on their personal returns. Unlike a C-Corporation, an S-Corporation is required to file an annual information tax return. A few other differences are that S-Corps must have no more than 100 shareholders (all individuals, not corporations), have only one class of stock, and be owned by U.S. citizens or resident aliens.

There are advantages to establishing an S-Corp in West Virginia. Registering as an S-Corporation offers you:

  • The ability to operate as a corporation even if the owner leaves the company or passes away.
  • Pass-through taxation, as owners report their share of the profits and losses on their individual tax returns.
  • A way out of being taxed twice, the way you would be in a C-Corporation. There is no double taxation occurring--once as income and again as dividend income. You save more money!
  • The opportunity to issue shares of stock to increase the value of your business.
  • A deduction of 20% of all S-Corp income on your personal tax return, which can significantly reduce your tax burden.
  • The ability to write off the S-Corp’s losses on shareholders’ individual tax returns.
  • Annual tax filing requirements, unlike C-Corps which must file every quarter.
  • Corporate status, which means shareholders, directors, and officers are protected from sharing liability as long as there is no evidence of fraud or other misdeeds

But there are a few disadvantages to starting an S-Corp. One of those is the fact that, unlike a C-Corp, there are restrictions on ownership if you start a West Virginia S-Corp. S-Corporations can only be owned by United States citizens or resident aliens. Additionally, an S-Corp permits only 100 shareholders, while for a C-Corp, there is no limit. But overall, the benefits far outweigh the setbacks, and an S-Corporation is an excellent choice for many entrepreneurs looking to start a business in West Virginia.

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Learn the Benefits of an S-Corp

Educating yourself about the different types of corporations can help you assess what is the right business structure for you. It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Decide on a Registered Agent

Next, figure out who the Registered Agent for the corporation should be. The State of West Virginia requires every corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately. The Registered Agent will also act as the contact point between the West Virginia Secretary of State and the corporation. Once you assign someone as your Registered Agent, they can receive official correspondence and documents on behalf of your business.

A Registered Agent can be either an individual who is a resident of West Virginia or a business entity that is authorized to conduct business in the state (but not your own business). This can be you or someone else within your company, but keep in mind that this person will be through whom the state has contact with your business. This agent will receive legal documents (known as “Service of Process”) that pertain to your business. Your Registered Agent’s information would go on your most important West Virginia Secretary of State corporation forms.

Generally speaking, a Registered Agent in West Virginia must meet the following requirements:
  • Possess a physical street address located in West Virginia (no P.O. Box address).
  • Be available during regular business hours, typically Monday through Friday, 9 am to 5 pm.

Although the most comfortable option for a West Virginia Registered Agent would be to name yourself, a friend, or a family member, know that this information will be public record. Not only will the information be searchable on West Virginia’s Secretary of State website, it can also be republished on other sites as well. If you work from home and would much rather keep your home address private, this might not be the best choice. An alternative you can look into is hiring a West Virginia Registered Agent Service. While there are a variety of commercial West Virginia Registered Agent Services, for your convenience, we also offer a Registered Agent Service for a small charge that you can include as an add-on to your shopping cart.

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Decide on a Registered Agent

Next, figure out who the Registered Agent for the corporation should be. The State of West Virginia requires every corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately.

Obtain an Employer
Identification Number

Next, your West Virginia S-Corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Fortunately, you do not have to waste time dealing with the IRS on your own. Going through the IRS directly to get your EIN can be complicated, confusing, and frustrating. GovDocFiling alleviates the angst and aggravation of filing government documents, including apply for an EIN, or Tax ID number. Plus, GovDocFiling has one low price for same-day processing and delivery of your EIN (other Tax ID filing services charge more than $300 for same-day service!). Easily apply for your EIN/Tax ID online here. In addition, if you have any questions about obtaining an EIN, we offer 24/7 email and phone support to help you through the process. Emails are answered quickly at info@govdocfiling.com.

If you know your S-Corp will have employees, you also know that you will have to pay them. Plus, you will need to figure out the amount you should deduct from their wages for tax purposes. Employees will need to fill out a W-4 Form, and you will need to give them pay stubs with their tax information. Before this all gets overwhelming, keep in mind that we offer Payroll, Tax and HR compliance solutions with our partner, ADP. We make it easy to pay your employees, track time, and file taxes effortlessly. Plus, you and your employees can view and update payroll information via an app--accessible anywhere, anytime, backed by 24/7 live customer service support.

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Obtain an Employer Identification Number

Next, your West Virginia S-Corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Submit Your Articles
of Organization

To create an S-Corp in West Virginia, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of West Virginia. It establishes the basic elements of the corporation, such as the name and address of the corporation, the number and classes of stock, and certain indemnification provisions. Prior to filing, the Articles of Incorporation must be signed by each incorporator in order to authenticate it. The document can be repealed or amended with the approval of the Board of Directors.

If filing on your own, there are usually non-refundable fees that you have to pay with check or money order, additional fees for hand-delivery of forms, and long wait times whether in person or by mail--especially if you’re filing for an S-Corp during peak season. GovDocFiling can speed up the process for you. We offer an easy online application, expedited pricing, and a free business start-up guide and resources with all filings. You can apply here today.

Once your completed West Virginia Articles of Incorporation form is accepted, congratulations! Your company now exists as a recognized legal entity that is authorized to conduct business within the State of West Virginia.

Please note that, in West Virginia, filing your Articles of Incorporation alone does not mean you are ready to do business in West Virginia. In addition, you must obtain a business license from the West Virginia Department of Tax and Revenue. This is part of the West Virginia S-Corp registration process, and more information can be found below in Step 9.


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Submit Your Articles of Organization

To create an S-Corp in West Virginia, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of West Virginia.

Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your WV S-Corp. Basically, bylaws are rules of operation that create the company’s structure, ensuring that employees, shareholders, and executives are in the loop about how the business will be run.

Key points are covered in the corporate bylaws document, such as when annual meetings will be held, the size of your Board of Directors, and how this form will be amended if need be. In addition, member duties are explained and solutions to common disputes between parties are offered. Voting rights and salaries are discussed, and “what if” scenarios are presented. Having bylaws allows you to set up a structure that works for your business’s unique needs instead of adhering to default regulations within the state.

While bylaws are not required in some states, they are required in West Virginia. It is important to establish a set of bylaws that ensure your business runs smoothly. Filling out and filing this document prior to starting an S-Corporation in West Virginia provides protection for your business.

You can use this corporate bylaws generator to get a sense of what goes into a typical set of bylaws. To ensure it is done correctly, you can have a lawyer look over your bylaws prior to submission to ensure all necessary rules and scenarios are covered. Get legal advice from our partner Rocket Lawyer.

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Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your WV S-Corp.

Elect a Board of Directors

West Virginia law requires one or more director(s). The Board of Directors, while they are not involved in the daily tasks of running a business, represent or govern the corporation. Their duties include handling finances and fulfilling legal requirements, as well as determining the mission of the company.

People who do not work for your company can be a part of your Board of Directors. In fact, many businesses turn to lawyers or other business owners to fill in a spot on their Board of Directors. That way, they receive outside expertise from them, plus they may come with their own additional business contacts.

These board members must adhere to something called “the duty of loyalty,” which means that directors and officers of an S-Corporation can only make decisions without any personal economic conflict. The duty of loyalty is breached if something like a self-interested transaction occurs or a business opportunity is stolen. Plus, there is also the “duty of care” to consider. Members of the Board of Directors must make decisions that are in the best interests of the corporation at all times. For example, making a decision that causes serious losses for the shareholders would mean they are in violation of their duty of care and they can be sued for this.

Your board members will have to hold meetings to make important decisions, such as issuing shares or amending something in the Articles of Incorporation. The Board of Directors typically receives equal voting rights (some states, like Delaware, are an exception) when making these decisions. During the first meeting of the S-Corporation's Board of Directors, directors can appoint officers, decide on bylaws, select a corporate bank, and more. All subsequent meetings must be held annually, though, of course, if more are needed, more can be held.

Minutes of the meeting, which is the recorded documentation of what was discussed or what happened during a meeting, must be recorded to exhibit transparency in business operations, but they do not need to be filed with the state. Instead, these should be kept with your other corporate records, such as Articles of Incorporation and bylaws. These documents should be saved for at least seven years in order to protect your company.

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Elect a Board of Directors

First, familiarize yourself with the roles within an S-Corporation. There are three groups:

  • Shareholders
  • Board of Directors
  • Officers

Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything--if there are multiple shareholders and directors. If a corporation has only one shareholder or director, the decision-making, of course, falls on that person without the need for a group meeting. Officers, on the other hand, do not operate in groups. An officer holding the position of president, chief executive officer, or treasurer, for example, is an agent of the corporation and has the authority to act on behalf of the corporation on his or her own. Within smaller S-Corps, directors are sometimes also officers and shareholders. In that case, even though the same person is serving in multiple roles, each role has very different responsibilities and is treated as such.

Shareholders are the owners of the corporation, and they elect the Board of Directors. The directors, in unison, oversee and direct corporation affairs and make business decisions. They employ officers who carry out the Board of Directors’ decisions. Officers are responsible for the day-to-day operations of the company. An officer can be terminated by the Board of Directors at any time. West Virginia requirements state that there should be as many officers as stated in the bylaws.

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Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything - if there are multiple shareholders and directors.

Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt. Unlike taking out a business loan, you do not pay interest that eats at your profits each month. The value of your business assets can be assessed by taking a look at what amount of your business assets are owned by shareholders vs. lenders. Corporations that have a higher proportion of the company owned by lenders makes an investment in the business appear riskier. If shareholders do invest in your business and purchase stock, keep in mind that if your business fails, you would have to pay back your loans and shareholders.

While there are many advantages to issuing stock, keep in mind that shareholders have an ownership stake in the company. This means that they have certain rights, such as the ability to participate in voting and the assurance that they will be collecting dividends. Profits will be shared and decisions will have to be made in unison. The more stock you issue to shareholders, the smaller your ownership in the business (and the less of a say you have in business major business decisions). On the plus side, when your business grows, you can buy out the other shareholders and get your ownership back.

Issuing stock is not a requirement for S-Corporations, but a privilege that you can make use of if you choose. Doing so can help you fund your business if you are growing and have large, expensive projects planned in the near future. In that case, you can decide how much capital you need and figure out how many shares you’d like to issue and at what price per share. You will already have a number for how many shares you have to offer (that was decided when you filed your Articles of Incorporation). To properly assess the accurate value of each share, determine your company’s net worth first. This will help you figure out what percentage of ownership you believe each share is worth.

Typically, appointed Board of Directors can issue stock whenever and to whomever, as long as the recipient has a brokerage account and is over 18 years old. But within an S-Corp, there are a few more limitations that a C-Corp does not have. While C-Corporations can be owned by any individual or legal entity--foreign or domestic--S-Corporations can only be owned by United States citizens or resident aliens. On top of that, an S-Corp does not allow an unlimited number of shareholders. It maxes out at 100. Also, S-Corps are not permitted to be owned by a C-Corp, another S-Corp, an LLC, a partnership, or many trusts. Lastly, unlike in a C-Corp where shareholders have the option between different stock classes (common, preferred, income, value, growth), an S-Corp only permits one stock class (common).

Another thing that can limit you here is if you’ve chosen to classify your S-Corp as a private corporation. This is typically a smaller corporation where the stock isn't offered to the public. A publiC-Corporation is authorized to sell their stock to the public, while a private company can’t trade its share on public stock exchanges. But a private corporation is not always small. Many big companies are privately held--such as Dell, Koch Industries, Deloitte, and Cargill. It can be harder for private corporations to raise funds, but it can be important in order to maintain family ownership.

Whoever your corporation may sell stock to, it’s important to have a shareholder agreement for protection. This would explain the shareholder’s rights and voting power within the S-Corporation. You will want to decide and let you shareholders know what kind of say they have in the organization or management of the company when they are issued stock. West Virginia requires an annual shareholder meeting.

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Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt.

Familiarize Yourself with the
State’s Taxes and Licenses

Income from pass-through entities, such as a West Virginia Limited Liability Company and West Virginia S-Corp, “passes through” the business to the owners, who are required to report this information on their personal tax returns. In that case, each individual S-Corp member would then have to pay taxes on his or her share of the S-Corp’s income. The S-Corp itself does not pay federal income taxes.

West Virginia also has a business registration tax of $30 that all S-Corps must pay when they are first formed (prior to conducting business). Payment is due to the State Tax Department. You can register and pay the tax online, after which you will be issued a business registration certificate. Operating a business without a certificate can result in a fine of $100 per day for each day that a business operates without properly registering. Additional taxes, such as sales and use tax, excise and fuel tax, business and occupation tax, are also found on the same West Virginia State Tax Department website in the above link.

In addition, there may be extra fees for certain insurances, permits, and licenses, depending on the state’s laws and the type of business you own. For example, you may need worker’s compensation, unemployment insurance, building permits, etc. Find out the requirements for S-Corps in the state you plan to run your business in. Business permits and licenses depending on profession is specified by the West Virginia Division of Labor and can be found here. Keep in mind that different cities or counties may require certain permits and licenses that other regions do not. Contact your city or county to see if there are any insurances, permits, or licenses you might need to obtain before you begin operating your business.

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Familiarize Yourself with the State’s Taxes and Licenses

Income from pass-through entities, such as a West Virginia Limited Liability Company and West Virginia S-Corp, “passes through” the business to the owners, who are required to report this information on their personal tax returns. In that case, each individual S-Corp member would then have to pay taxes on his or her share of the S-Corp’s income.

File an Annual Renewal

Like most states, the State of West Virginia requires all S-Corp owners to file a report that updates all the information that the West Virginia Secretary of State has on file. This is called the Annual Report and it is submitted every year. Each Annual Report is due by July 1, along with a fee of $25 payable to the West Virginia Secretary of State. There is a $50 late fee.

West Virginia Annual Report filing is available online on the West Virginia Secretary of State website. Filing an Annual Report is necessary for maintaining an active status after starting an S-Corp in WV. Not filing the report or paying the fee will result in being presented a West Virginia corporation dissolution form, after which the state will dissolve your business.

Annual Reports can be rather complex–requiring the deciphering of gross receipts, dividends, interest, losses, and all West Virginia S-Corp fees–and you should seek the help of an accountant to ensure that it is filled out properly. Our partner, Bench, will provide you with a team of accountants to help you with your franchise tax reports, as well as general bookkeeping services with monthly financial statements and intuitive software to monitor your business profits and expenses.

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File an Annual Renewal

Like most states, the State of West Virginia requires all S-Corp owners to file a report that updates all the information that the West Virginia Secretary of State has on file. This is called the Annual Report and it is submitted every year. Each Annual Report is due by July 1, along with a fee of $25 payable to the West Virginia Secretary of State.

Raise Funds for Your Corporation

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business. Some of the most commonly-used options for obtaining funding for your S-Corp are:

  • Personal savings and assets
  • Informal loans from family and friends
  • Peer-to-peer lending sites or crowdfunding
  • Conventional bank loan
  • Short-term credit card loans
  • Government-sponsored grants/loan programs
  • Issuing stock to shareholders
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Personal Saving/Assets

Use your own savings, liquidate your assets, refinance your home, borrow your Roth IRA, etc.

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Informal Loans From Family/Friends

Ask friends or family members if they would be willing to invest in your business.

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Peer-to-Peer Landing Sites

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

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Conventional Bank Loan

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

Many new S-Corporation owners begin with their savings to fund their new business venture. If your savings are not enough, you may need to look into liquidating your personal assets or use them as collateral for loans. Can you sell your property or refinance your home? Do you have a retirement account such as a Traditional or Roth IRA? Usually, you can withdraw contributions you made to your IRA anytime, tax- and penalty-free, but that is not always the case. Find out what kind of fees your particular retirement plan will hit you with before using your IRA to fund your business.

Next, look into whether you know someone who shares your passion for your business and has the ability to contribute financially to your dream. These personal connections may want to support your startup idea. Although accepting an informal loan from a close friend or relative may feel safe, you should still protect yourself in case your relationship with the friend or family member goes sour. Have an official contract drawn up that all parties agree to. You can choose to have it notarized and have witnesses present for extra protection.

If you prefer not to borrow from friends and family, you can turn to a peer-to-peer (P2P) or social lending website. A P2P site is a place where investors seek out alternative opportunities to invest outside of stocks and bonds. You can apply for a loan and investors can decide whether or not they wish to fund your proposed business through interest-based loans. You can also look into crowdfunding, which is a way for small businesses or startups to raise money online through donations. These options typically require the ability to promote your business well, ensure complete transparency of where the funds go, and sometimes, the possibility of giving up ownership of a piece of your business. Make sure you look into all of the specifics.

You might be hoping to rely on a conventional loan from a bank, credit union or other lending institution for your main source of funds. In this case, you would need a formal business plan to present during your loan application process. If approved, you would be required to sign a legal contract, or a Promissory Note, outlining your obligations to the lender (which would primarily entail regular payments until the loan is paid off). If you are a first-time business owner, it is likely that you may be rejected initially. In that case, you can improve your application and reapply, or look into alternative sources of funding such as short-term financing via credit cards.

Using a credit card as a means of obtaining a fast and easy business loan would grant you use of immediate funds without the hassle and paperwork of loan applications or business plans. This is the best option for a brand new business, and we work with Nav to give our customers access to the credit they need. Visit our financing page and fill out the form for more information.

There are many credit cards that have low or no annual fees, low introductory interest rates, and other rewards depending on your spending. But be careful: make sure you pay back your credit card before the promotional low interest rate expires and skyrockets, or prior to having to pay large annual fees. And don’t make large purchases that can take years to pay back. For example, getting an equipment loan to purchase a piece of equipment is smarter than putting it on a credit card. Credit cards can be a good temporary solution if your business plan will allow you to pay back the debt quickly.

Another option at your disposal is a government-sponsored grant or loan program. Traditional lenders can turn to federal, state, or local governments to finance their business if such a grant or program is available. Typically, these programs consider sponsoring specific type of businesses or certain business owners, so be sure to research what government-sponsored loan your particular business or you might be eligible for.


Lastly, you can invite people to your team. S-Corporations may have a single person as the company's owner, or an unlimited number of shareholders participating in the ownership of the business. If you could see your businesses strategy succeeding with a partner or multiple partners, pool together your financial resources with another member to support your startup. An advantage to this funding option is your partner(s) may come with their own social network of business contacts and possibly even their own potential investors. To protect yourself, you can adjust your bylaws and ensure that you are still the primary owner of your West Virginia S-Corporation.

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Raise Funds for Your S-Corp

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business.

Create a Business Website

Creating a website for your West Virginia business is not a requirement but it is recommended to any business owner operating in the modern world. An online presence is important to have and maintain in order to ensure that your customers trust your company and know they will receive good customer service. Having a website gives your business legitimacy; your customers will visit your website and see that you are a real company with an actual website where they can read about the company’s origin and products/services and access contact information. Being able to read up on a company on their website leads to trust between a consumer and an organization. Also, dependable customer service is often offered through a website. By offering an email address, a contact form, and/or live chat with a representative on your website, you are making it easy for a customer to get connected with someone knowledgeable about the product/service. That allows a customer to know that there is a real person who cares about their satisfaction within the company that they are doing business with.

Start S-Corp formation

If the website is outdated or there is no website, a consumer may feel that you are not a legitimate business but a scam with no licenses to back up your business’ operations. You can avoid losing customers due to not having a professional website by ensuring that you have one. We work with GoNorth Websites to provide new businesses with high quality, cost-effective websites. Find out more about our custom designed, written, and developed websites, plus optional internet marketing add-ons that help you grow your business.

But websites needs maintenance too. You can’t simply have one created and never update it throughout the years. Policies and terms change, companies grow, products/services improve, and all of that (and more) can be reflected on the website. This keeps your customers up-to-date and offers a personal touch that is valued by any consumer.

In addition, you can look into having a blog or utilizing social media as another means of keeping your customers in-the-know and offering them a way to interact with your company. An online and/or social media presence can also lead to responsive customers who can offer you feedback on how you’re doing—plus, it’ll help get your company’s name out there.

If this all sounds like more than you’d like to deal with on your own, know that you can hire someone to maintain your website and social media presence for you—just like you can hire customer representatives to handle all correspondence. You can employ a web agency to monitor your website and/or a social media marketing agency to manage your social media campaign. A social media campaign is a coordinated marketing plan that can assist you with your business goals, which translates into extra advertising for your new business. Marketing your company can help you have a more profitable business and can aid you with paying back your business loans quicker—something any business owner aims for. Regardless of industry, all businesses should consider having a website as part of the first steps of starting a business.

The Benefits of Having an Online Presence
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You will show your customers that you are a legitimate business and build trust.
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Your company will be easy to correspond with and you can provide good, responsive customer service.
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Your customers will be kept up-to-date on all exciting news related to your business.


If you’ve decided that you want to have a website for your business, keep a few things in mind. When coming up with a website name, make sure that the domain contains your business name and is easy to type and remember for future visits. If you come up with a great web domain that you’d like to use for your business but you don’t plan to create a business website today, you may want to buy the URL to prevent others from acquiring it.

While brainstorming website URLs for your website, you’re going to either realize that you already know what your business is going to be named or that you have no idea what or how to name your business. Here are a few West Virginia corporation name tips:

  • Follow S-Corp naming guidelines. A corporation’s name usually has to include words, like Corporation, Incorporated, Company, or Limited; or abbreviations, like Corp., Inc., Co., or Ltd. It’s also important not to use any words or phrases that will make it easy for someone to mistake your company for a federal agency; think “State Department.”
  • Find a unique name. If you’re getting an S-Corp in West Virginia you will need an original name that is not in use by another corporation. To check if a name has already been taken, you can search the Business Name Availability Database.
  • Make sure it is available as a web domain. This way, you can find out if another company outside of West Virginia has a corporation with the same name. In that case, think of something more original.
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Create a Business Website

Creating a website for your West Virginia business is not a requirement but it is recommended to any business owner operating in the modern world. An online presence is important to have and maintain in order to ensure that your customers trust your company and know they will receive good customer service.

Begin Operating Your Business

Once you become an official S-Corporation in the state of West Virginia, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings. This is mandatory if you don’t want your new business to run into any issues. If you’d rather not do these tasks yourself, you can sign up for a service that will automatically send you alerts ahead of crucial state and federal filing deadlines. Likewise, you can hire an accountant, a tax professional, and/or an attorney to ensure you are not making errors when keeping records, filling out paperwork, and making payments.

Next, make sure you’ve obtained all necessary permits, licenses, and insurances that your WV corp might need—and you’re good to go! Begin operating your West Virginia business with peace of mind, knowing that you are protected by an S-Corp in case anything unforeseeable affects your new business venture.

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Begin Operating Your Business

Once you become an official S-Corporation in the state of West Virginia, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings.


Washington S-Corp

Learn the Benefits of an S-Corp

When you decide to start a business, there are a number of business entities to choose from. Each has its own advantages and disadvantages, which we will introduce to you here. Prospective business owners should consult with professionals, such as a business attorney and accountants, before making the final decision. But educating yourself about the different types of corporations can help you assess what is the right business structure for you beforehand.

But first, are you ready to incorporate? It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Typically, “material size” means a business with revenue above $100,000. Once you know you’re ready, you have the option between choosing to classify your business as a C-Corporation or an S-Corporation. While S-Corps used to be the way to go for small businesses (it’s even been nicknamed the “Small BusinesS-Corporation”), thanks to the 2017 Tax Cuts and Jobs Act, C-Corps may now offer lower corporate tax rates to smaller business. Now, S-Corps are sometimes advisable for larger businesses. But keep in mind that C-Corps give you more options to expand and raise money, which can be very beneficial to a larger business. You may want to discuss the differences with a financial advisor or lawyer who can help break down all of the costs to help you assess what will work best for you.

Whether you choose to structure your business entity as a C or S-Corporation will determine how much you’ll pay in taxes, the ways you’re permitted to raise money, and the ease with which you can expand as your business grows. The standard and most common type of corporation is a C-Corporation. In fact, a C-Corp is the default type of corporation, and all S-Corps begin as a C-Corp or LLC. When you initially incorporate, your company will automatically become a standard C-Corp, and only after you file multiple forms can you transition to an S-Corp for federal tax purposes.

Why is an S-Corp a good idea for an e-commerce Business?

If there is an issue with a product, an S-Corp protects you. Compensation can only be taken from the S-Corp’s assets, not your personal assets.

Start Your S-Corp Now
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How do you know which type of corporation you want to register your business as when they are both so similar? Both types of corporations offer owners protection from individual liability, so shareholders (and directors, officers, and employees) are typically not personally responsible for business debts. C-Corps and S-Corps require similar paperwork. In addition, both are owned by shareholders, have a Board of Directors with annual meetings, and are managed by executive officers. It is also a requirement that both types of corporations pay annual fees, set up bylaws, and issue stock. Basically, an S-Corporation is the legal equivalent of a regular C-Corporation. Both have the same rights. They just pays taxes differently.

But why opt for an S-Corp? What are the benefits of setting up your state of Washington business as an S-Corp?

The main difference between a C and S-Corporation is that an S-Corp is not treated as a disregarded entity. It is a pass-through tax entity. While a C-Corp’s tax attributes are determined at the entity level, an S-Corp determines its own income, deductions, credits, etc. It spreads out the tax attributes among its owners (or to its sole owner) as part of shared ownership. Likewise, within an S-Corporation, the profits are passed on to the shareholders, who are then taxed based on their personal returns. Unlike a C-Corporation, an S-Corporation is required to file an annual information tax return. A few other differences are that S-Corps must have no more than 100 shareholders (all individuals, not corporations), have only one class of stock, and be owned by U.S. citizens or resident aliens.

There are advantages to establishing an S-Corp in Washington. Registering as an S-Corporation offers you:

  • The ability to operate as a corporation even if the owner leaves the company or passes away.
  • Pass-through taxation, as owners report their share of the profits and losses on their individual tax returns.
  • A way out of being taxed twice, the way you would be in a C-Corporation. There is no double taxation occurring--once as income and again as dividend income. You save more money!
  • The opportunity to issue shares of stock to increase the value of your business.
  • A deduction of 20% of all S-Corp income on your personal tax return, which can significantly reduce your tax burden.
  • The ability to write off the S-Corp’s losses on shareholders’ individual tax returns.
  • Annual tax filing requirements, unlike C-Corps which must file every quarter.
  • Corporate status, which means shareholders, directors, and officers are protected from sharing liability as long as there is no evidence of fraud or other misdeeds

But there are a few disadvantages to starting an S-Corp. One of those is the fact that, unlike a C-Corp, there are restrictions on ownership if you start a Washington S-Corp. S-Corporations can only be owned by United States citizens or resident aliens. Additionally, an S-Corp permits only 100 shareholders, while for a C-Corp, there is no limit. But overall, the benefits far outweigh the setbacks, and an S-Corporation is an excellent choice for many entrepreneurs looking to start a business in Washington.

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Learn the Benefits of an S-Corp

Educating yourself about the different types of corporations can help you assess what is the right business structure for you. It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Decide on a Registered Agent

Next, figure out who the Registered Agent for the corporation should be. The State of Washington requires every corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately. The Registered Agent will also act as the contact point between the Washington Secretary of State and the corporation. Once you assign someone as your Registered Agent, they can receive official correspondence and documents on behalf of your business.

A Registered Agent can be either an individual who is a resident of Washington or a business entity that is authorized to conduct business in the state (but not your own business). This can be you or someone else within your company, but keep in mind that this person will be through whom the state has contact with your business. This agent will receive legal documents (known as “Service of Process”) that pertain to your business. Your Registered Agent’s information would go on your most important Washington Secretary of State corporation forms.

Generally speaking, a Registered Agent in Washington must meet the following requirements:
  • Possess a physical street address located in Washington (no P.O. Box address).
  • Be available during regular business hours, typically Monday through Friday, 9 am to 5 pm.

Although the most comfortable option for a Washington Registered Agent would be to name yourself, a friend, or a family member, know that this information will be public record. Not only will the information be searchable on Washington’s Secretary of State website, it can also be republished on other sites as well. If you work from home and would much rather keep your home address private, this might not be the best choice. An alternative you can look into is hiring a Washington Registered Agent Service. While there are a variety of commercial Washington Registered Agent Services, for your convenience, we also offer a Registered Agent Service for a small charge that you can include as an add-on to your shopping cart.

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Decide on a Registered Agent

Next, figure out who the Registered Agent for the corporation should be. The State of Washington requires every corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately.

Obtain an Employer
Identification Number

Next, your S-Corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Fortunately, you do not have to waste time dealing with the IRS on your own. Going through the IRS directly to get your EIN can be complicated, confusing, and frustrating. GovDocFiling alleviates the angst and aggravation of filing government documents, including apply for an EIN, or Tax ID number. Plus, GovDocFiling has one low price for same-day processing and delivery of your EIN (other Tax ID filing services charge more than $300 for same-day service!). Easily apply for your EIN/Tax ID online here. In addition, if you have any questions about obtaining an EIN, we offer 24/7 email and phone support to help you through the process. Emails are answered quickly at info@govdocfiling.com.

If you know your S-Corp will have employees, you also know that you will have to pay them. Plus, you will need to figure out the amount you should deduct from their wages for tax purposes. Employees will need to fill out a W-4 Form, and you will need to give them pay stubs with their tax information. Before this all gets overwhelming, keep in mind that we offer Payroll, Tax and HR compliance solutions with our partner, ADP. We make it easy to pay your employees, track time, and file taxes effortlessly. Plus, you and your employees can view and update payroll information via an app--accessible anywhere, anytime, backed by 24/7 live customer service support.

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Obtain an Employer Identification Number

Next, your S-Corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Submit Your Articles
of Organization

To create an S-Corp in Washington, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of Washington. It establishes the basic elements of the corporation, such as the name and address of the corporation, the number and classes of stock, and certain indemnification provisions. Prior to filing, the Articles of Incorporation must be signed by each incorporator in order to authenticate it. The document can be repealed or amended with the approval of the Board of Directors.

If filing on your own, there are usually non-refundable fees that you have to pay with check or money order, additional fees for hand-delivery of forms, and long wait times whether in person or by mail--especially if you’re filing for an S-Corp during peak season. GovDocFiling can speed up the process for you. We offer an easy online application, expedited pricing, and a free business start-up guide and resources with all filings. You can apply here today.

Once your completed Washington Articles of Incorporation form is accepted, congratulations! Your company now exists as a recognized legal entity that is authorized to conduct business within the State of Washington.

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Submit Your Articles of Organization

To create an S-Corp in Washington, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of Washington.

Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your WA S-Corp. Basically, bylaws are rules of operation that create the company’s structure, ensuring that employees, shareholders, and executives are in the loop about how the business will be run.

Key points are covered in the corporate bylaws document, such as when annual meetings will be held, the size of your Board of Directors, and how this form will be amended if need be. In addition, member duties are explained and solutions to common disputes between parties are offered. Voting rights and salaries are discussed, and “what if” scenarios are presented. Having bylaws allows you to set up a structure that works for your business’s unique needs instead of adhering to default regulations within the state.

While bylaws are not required in some states, they are required in Washington. It is important to establish a set of bylaws that ensure your business runs smoothly. Filling out and filing this document prior to starting an S-Corporation in Washington provides protection for your business.

You can use this corporate bylaws generator to get a sense of what goes into a typical set of bylaws. To ensure it is done correctly, you can have a lawyer look over your bylaws prior to submission to ensure all necessary rules and scenarios are covered. Get legal advice from our partner Rocket Lawyer.

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Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your WA S-Corp.

Elect a Board of Directors

Washington law requires one or more director(s). The Board of Directors, while they are not involved in the daily tasks of running a business, represent or govern the corporation. Their duties include handling finances and fulfilling legal requirements, as well as determining the mission of the company.

People who do not work for your company can be a part of your Board of Directors. In fact, many businesses turn to lawyers or other business owners to fill in a spot on their Board of Directors. That way, they receive outside expertise from them, plus they may come with their own additional business contacts.

These board members must adhere to something called “the duty of loyalty,” which means that directors and officers of an S-Corporation can only make decisions without any personal economic conflict. The duty of loyalty is breached if something like a self-interested transaction occurs or a business opportunity is stolen. Plus, there is also the “duty of care” to consider. Members of the Board of Directors must make decisions that are in the best interests of the corporation at all times. For example, making a decision that causes serious losses for the shareholders would mean they are in violation of their duty of care and they can be sued for this.

Your board members will have to hold meetings to make important decisions, such as issuing shares or amending something in the Articles of Incorporation. The Board of Directors typically receives equal voting rights (some states, like Delaware, are an exception) when making these decisions. During the first meeting of the S-Corporation's Board of Directors, directors can appoint officers, decide on bylaws, select a corporate bank, and more. All subsequent meetings must be held annually, though, of course, if more are needed, more can be held.

Minutes of the meeting, which is the recorded documentation of what was discussed or what happened during a meeting, must be recorded to exhibit transparency in business operations, but they do not need to be filed with the state. Instead, these should be kept with your other corporate records, such as Articles of Incorporation and bylaws. These documents should be saved for at least seven years in order to protect your company.

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Elect a Board of Directors

First, familiarize yourself with the roles within an S-Corporation. There are three groups:

  • Shareholders
  • Board of Directors
  • Officers

Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything--if there are multiple shareholders and directors. If a corporation has only one shareholder or director, the decision-making, of course, falls on that person without the need for a group meeting. Officers, on the other hand, do not operate in groups. An officer holding the position of president, chief executive officer, or treasurer, for example, is an agent of the corporation and has the authority to act on behalf of the corporation on his or her own. Within smaller S-Corps, directors are sometimes also officers and shareholders. In that case, even though the same person is serving in multiple roles, each role has very different responsibilities and is treated as such.

Shareholders are the owners of the corporation, and they elect the Board of Directors. The directors, in unison, oversee and direct corporation affairs and make business decisions. They employ officers who carry out the Board of Directors’ decisions. Officers are responsible for the day-to-day operations of the company. An officer can be terminated by the Board of Directors at any time. Washington requirements state that there should be as many officers as stated in the bylaws, but a minimum of one. One person may hold multiple offices. If there are multiple officers, one officer is responsible for maintaining all corporate records.

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Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything - if there are multiple shareholders and directors.

Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt. Unlike taking out a business loan, you do not pay interest that eats at your profits each month. The value of your business assets can be assessed by taking a look at what amount of your business assets are owned by shareholders vs. lenders. Corporations that have a higher proportion of the company owned by lenders makes an investment in the business appear riskier. If shareholders do invest in your business and purchase stock, keep in mind that if your business fails, you would have to pay back your loans and shareholders.

While there are many advantages to issuing stock, keep in mind that shareholders have an ownership stake in the company. This means that they have certain rights, such as the ability to participate in voting and the assurance that they will be collecting dividends. Profits will be shared and decisions will have to be made in unison. The more stock you issue to shareholders, the smaller your ownership in the business (and the less of a say you have in business major business decisions). On the plus side, when your business grows, you can buy out the other shareholders and get your ownership back.

Issuing stock is not a requirement for S-Corporations, but a privilege that you can make use of if you choose. Doing so can help you fund your business if you are growing and have large, expensive projects planned in the near future. In that case, you can decide how much capital you need and figure out how many shares you’d like to issue and at what price per share. You will already have a number for how many shares you have to offer (that was decided when you filed your Articles of Incorporation). To properly assess the accurate value of each share, determine your company’s net worth first. This will help you figure out what percentage of ownership you believe each share is worth.

Typically, appointed Board of Directors can issue stock whenever and to whomever, as long as the recipient has a brokerage account and is over 18 years old. But within an S-Corp, there are a few more limitations that a C-Corp does not have. While C-Corporations can be owned by any individual or legal entity--foreign or domestic--S-Corporations can only be owned by United States citizens or resident aliens. On top of that, an S-Corp does not allow an unlimited number of shareholders. It maxes out at 100. Also, S-Corps are not permitted to be owned by a C-Corp, another S-Corp, an LLC, a partnership, or many trusts. Lastly, unlike in a C-Corp where shareholders have the option between different stock classes (common, preferred, income, value, growth), an S-Corp only permits one stock class (common).

Another thing that can limit you here is if you’ve chosen to classify your S-Corp as a private corporation. This is typically a smaller corporation where the stock isn't offered to the public. A publiC-Corporation is authorized to sell their stock to the public, while a private company can’t trade its share on public stock exchanges. But a private corporation is not always small. Many big companies are privately held--such as Dell, Koch Industries, Deloitte, and Cargill. It can be harder for private corporations to raise funds, but it can be important in order to maintain family ownership.

Whoever your corporation may sell stock to, it’s important to have a shareholder agreement for protection. This would explain the shareholder’s rights and voting power within the S-Corporation. You will want to decide and let you shareholders know what kind of say they have in the organization or management of the company when they are issued stock. Washington requires an annual shareholder meeting, unless the directors are elected by written consent.

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Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt.

Familiarize Yourself with the
State’s Taxes and Licenses

Typically, income from pass-through entities, such as a Washington Limited Liability Company and Washington S-Corp, “passes through” the business to the owners, who are required to report this information on their personal tax returns. In that case, each individual S-Corp member would then have to pay taxes on his or her share of the S-Corp’s income.

Good news for prospective S-Corp owners in Washington. The State of WA does not have a corporation or personal income tax. Instead, Washington State has a Business and Occupation Tax (B & O Tax) if there are sales of goods or services. The B & O Tax is a type of gross income tax of 1.8% on revenue after your first $35,000 of gross receipts. Instead of using your EIN, this particular tax is tracked by your Washington State Unified Business Identifier Number, or UBI. A UBI number (also sometimes called a tax registration number, business registration number, or a business license number) is a 9-digit number that registers you across several state agencies and permits you to do business in Washington State. You can register for a UBI when you fill out all of your Washington S-Corp formation forms. Additional information on B & O Tax can be found on the Department of Revenue (DOR) of Washington State website.

There are other taxes a business owner must pay in Washington State, such as the retail sales and use tax, or personal property tax. Keep in mind that cities and counties can add on their own sales tax, so look into taxes specific to your location within the state. There is also a use tax, which is always the same as the sales tax in your local area. More info on taxes and rates can be found on the DOR website.

In addition, there may be extra fees for certain insurances, permits, and licenses, depending on the state’s laws and the type of business you own. For example, you may need worker’s compensation, unemployment insurance, building permits, etc. Washington permits and licenses listed by specialty can be found here. Find out the requirements for S-Corps in the state you plan to run your business in. Keep in mind that different cities or counties may require certain permits and licenses that other regions do not. Contact your city or county to see if there are any insurances, permits, or licenses you might need to obtain before you begin operating your business.

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Familiarize Yourself with the State’s Taxes and Licenses

Typically, income from pass-through entities, such as a Washington Limited Liability Company and Washington S-Corp, “passes through” the business to the owners, who are required to report this information on their personal tax returns. In that case, each individual S-Corp member would then have to pay taxes on his or her share of the S-Corp’s income.

File an Annual Renewal

Like most states, the State of Washington requires all S-Corp owners to file an Annual Report with the Washington Secretary of State (SOS). The initial report is due within 120 days of your Washington S-Corp’s formation. All subsequent annual reports are due on August 31, along with a fee of $60 payable to the State of Washington Business Licensing Service. It is another $50 to expedite the service. You can file online on the Washington SOS website. You can use the same website to print a paper form to mail or to take in person to the Washington State Department of Revenue office. Filing this form is necessary for maintaining an active business status.

Annual Reports can be rather complex–requiring the deciphering of gross receipts, dividends, interest, losses, and all Washington S-Corp fees–and you should seek the help of an accountant to ensure that it is filled out properly. Our partner, Bench, will provide you with a team of accountants to help you with your franchise tax reports, as well as general bookkeeping services with monthly financial statements and intuitive software to monitor your business profits and expenses.

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File an Annual Renewal

Like most states, the State of Washington requires all S-Corp owners to file an Annual Report with the Washington Secretary of State (SOS). The initial report is due within 120 days of your Washington S-Corp’s formation.

Raise Funds for Your Corporation

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business. Some of the most commonly-used options for obtaining funding for your S-Corp are:

  • Personal savings and assets
  • Informal loans from family and friends
  • Peer-to-peer lending sites or crowdfunding
  • Conventional bank loan
  • Short-term credit card loans
  • Government-sponsored grants/loan programs
  • Issuing stock to shareholders
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Personal Saving/Assets

Use your own savings, liquidate your assets, refinance your home, borrow your Roth IRA, etc.

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Informal Loans From Family/Friends

Ask friends or family members if they would be willing to invest in your business.

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Peer-to-Peer Landing Sites

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

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Conventional Bank Loan

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

Many new S-Corporation owners begin with their savings to fund their new business venture. If your savings are not enough, you may need to look into liquidating your personal assets or use them as collateral for loans. Can you sell your property or refinance your home? Do you have a retirement account such as a Traditional or Roth IRA? Usually, you can withdraw contributions you made to your IRA anytime, tax- and penalty-free, but that is not always the case. Find out what kind of fees your particular retirement plan will hit you with before using your IRA to fund your business.

Next, look into whether you know someone who shares your passion for your business and has the ability to contribute financially to your dream. These personal connections may want to support your startup idea. Although accepting an informal loan from a close friend or relative may feel safe, you should still protect yourself in case your relationship with the friend or family member goes sour. Have an official contract drawn up that all parties agree to. You can choose to have it notarized and have witnesses present for extra protection.

If you prefer not to borrow from friends and family, you can turn to a peer-to-peer (P2P) or social lending website. A P2P site is a place where investors seek out alternative opportunities to invest outside of stocks and bonds. You can apply for a loan and investors can decide whether or not they wish to fund your proposed business through interest-based loans. You can also look into crowdfunding, which is a way for small businesses or startups to raise money online through donations. These options typically require the ability to promote your business well, ensure complete transparency of where the funds go, and sometimes, the possibility of giving up ownership of a piece of your business. Make sure you look into all of the specifics.

You might be hoping to rely on a conventional loan from a bank, credit union or other lending institution for your main source of funds. In this case, you would need a formal business plan to present during your loan application process. If approved, you would be required to sign a legal contract, or a Promissory Note, outlining your obligations to the lender (which would primarily entail regular payments until the loan is paid off). If you are a first-time business owner, it is likely that you may be rejected initially. In that case, you can improve your application and reapply, or look into alternative sources of funding such as short-term financing via credit cards.

Using a credit card as a means of obtaining a fast and easy business loan would grant you use of immediate funds without the hassle and paperwork of loan applications or business plans. This is the best option for a brand new business, and we work with Nav to give our customers access to the credit they need. Visit our financing page and fill out the form for more information.

There are many credit cards that have low or no annual fees, low introductory interest rates, and other rewards depending on your spending. But be careful: make sure you pay back your credit card before the promotional low interest rate expires and skyrockets, or prior to having to pay large annual fees. And don’t make large purchases that can take years to pay back. For example, getting an equipment loan to purchase a piece of equipment is smarter than putting it on a credit card. Credit cards can be a good temporary solution if your business plan will allow you to pay back the debt quickly.

Another option at your disposal is a government-sponsored grant or loan program. Traditional lenders can turn to federal, state, or local governments to finance their business if such a grant or program is available. Typically, these programs consider sponsoring specific type of businesses or certain business owners, so be sure to research what government-sponsored loan your particular business or you might be eligible for.


Lastly, you can invite people to your team. S-Corporations may have a single person as the company's owner, or an unlimited number of shareholders participating in the ownership of the business. If you could see your businesses strategy succeeding with a partner or multiple partners, pool together your financial resources with another member to support your startup. An advantage to this funding option is your partner(s) may come with their own social network of business contacts and possibly even their own potential investors. To protect yourself, you can adjust your bylaws and ensure that you are still the primary owner of your Washington S-Corporation.

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Raise Funds for Your S-Corp

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business.

Create a Business Website

Creating a website for your Washington business is not a requirement but it is recommended to any business owner operating in the modern world. An online presence is important to have and maintain in order to ensure that your customers trust your company and know they will receive good customer service. Having a website gives your business legitimacy; your customers will visit your website and see that you are a real company with an actual website where they can read about the company’s origin and products/services and access contact information. Being able to read up on a company on their website leads to trust between a consumer and an organization. Also, dependable customer service is often offered through a website. By offering an email address, a contact form, and/or live chat with a representative on your website, you are making it easy for a customer to get connected with someone knowledgeable about the product/service. That allows a customer to know that there is a real person who cares about their satisfaction within the company that they are doing business with.

Start S-Corp formation

If the website is outdated or there is no website, a consumer may feel that you are not a legitimate business but a scam with no licenses to back up your business’ operations. You can avoid losing customers due to not having a professional website by ensuring that you have one. We work with GoNorth Websites to provide new businesses with high quality, cost-effective websites. Find out more about our custom designed, written, and developed websites, plus optional internet marketing add-ons that help you grow your business.

But websites needs maintenance too. You can’t simply have one created and never update it throughout the years. Policies and terms change, companies grow, products/services improve, and all of that (and more) can be reflected on the website. This keeps your customers up-to-date and offers a personal touch that is valued by any consumer.

In addition, you can look into having a blog or utilizing social media as another means of keeping your customers in-the-know and offering them a way to interact with your company. An online and/or social media presence can also lead to responsive customers who can offer you feedback on how you’re doing—plus, it’ll help get your company’s name out there.

If this all sounds like more than you’d like to deal with on your own, know that you can hire someone to maintain your website and social media presence for you—just like you can hire customer representatives to handle all correspondence. You can employ a web agency to monitor your website and/or a social media marketing agency to manage your social media campaign. A social media campaign is a coordinated marketing plan that can assist you with your business goals, which translates into extra advertising for your new business. Marketing your company can help you have a more profitable business and can aid you with paying back your business loans quicker—something any business owner aims for. Regardless of industry, all businesses should consider having a website as part of the first steps of starting a business.

The Benefits of Having an Online Presence
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You will show your customers that you are a legitimate business and build trust.
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Your company will be easy to correspond with and you can provide good, responsive customer service.
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Your customers will be kept up-to-date on all exciting news related to your business.


If you’ve decided that you want to have a website for your business, keep a few things in mind. When coming up with a website name, make sure that the domain contains your business name and is easy to type and remember for future visits. If you come up with a great web domain that you’d like to use for your business but you don’t plan to create a business website today, you may want to buy the URL to prevent others from acquiring it.

While brainstorming website URLs for your website, you’re going to either realize that you already know what your business is going to be named or that you have no idea what or how to name your business. Here are a few Washington corporation name tips:

  • Follow S-Corp naming guidelines. A corporation’s name usually has to include words, like Corporation, Incorporated, Company, or Limited; or abbreviations, like Corp., Inc., Co., or Ltd. It’s also important not to use any words or phrases that will make it easy for someone to mistake your company for a federal agency; think “State Department.”
  • Find a unique name. If you’re getting an S-Corp in Washington you will need an original name that is not in use by another corporation. To check if a name has already been taken, you can search the Washington Name Database.
  • Make sure it is available as a web domain. This way, you can find out if another company outside of Washington has a corporation with the same name. In that case, think of something more original.
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Create a Business Website

Creating a website for your Washington business is not a requirement but it is recommended to any business owner operating in the modern world. An online presence is important to have and maintain in order to ensure that your customers trust your company and know they will receive good customer service.

Begin Operating Your Business

Once you become an official S-Corporation in the state of Washington, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings. This is mandatory if you don’t want your new business to run into any issues. If you’d rather not do these tasks yourself, you can sign up for a service that will automatically send you alerts ahead of crucial state and federal filing deadlines. Likewise, you can hire an accountant, a tax professional, and/or an attorney to ensure you are not making errors when keeping records, filling out paperwork, and making payments.

Next, make sure you’ve obtained all necessary permits, licenses, and insurances that your WA corp might need — and you’re good to go! Begin operating your Washington business with peace of mind, knowing that you are protected by an S-Corp in case anything unforeseeable affects your new business venture.

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Begin Operating Your Business

Once you become an official S-Corporation in the state of Washington, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings.


Virginia S-Corp

Learn the Benefits of an S-Corp

When you decide to start a business, there are a number of business entities to choose from. Each has its own advantages and disadvantages, which we will introduce to you here. Prospective business owners should consult with professionals, such as a business attorney and accountants, before making the final decision. But educating yourself about the different types of corporations can help you assess what is the right business structure for you beforehand.

But first, are you ready to incorporate? It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Typically, “material size” means a business with revenue above $100,000. Once you know you’re ready, you have the option between choosing to classify your business as a C-Corporation or an S-Corporation. While S-Corps used to be the way to go for small businesses (it’s even been nicknamed the “Small BusinesS-Corporation”), thanks to the 2017 Tax Cuts and Jobs Act, C-Corps may now offer lower corporate tax rates to smaller business. Now, S-Corps are sometimes advisable for larger businesses. But keep in mind that C-Corps give you more options to expand and raise money, which can be very beneficial to a larger business. You may want to discuss the differences with a financial advisor or lawyer who can help break down all of the costs to help you assess what will work best for you.

Whether you choose to structure your business entity as a C or S-Corporation will determine how much you’ll pay in taxes, the ways you’re permitted to raise money, and the ease with which you can expand as your business grows. The standard and most common type of corporation is a C-Corporation. In fact, a C-Corp is the default type of corporation, and all S-Corps begin as a C-Corp or LLC. When you initially incorporate, your company will automatically become a standard C-Corp, and only after you file Form 8832 or Form 2553 can you transition to an S-Corp for federal tax purposes.

Why is an S-Corp a good idea for an e-commerce Business?

If there is an issue with a product, an S-Corp protects you. Compensation can only be taken from the S-Corp’s assets, not your personal assets.

Start Your S-Corp Now
transporter

How do you know which type of corporation you want to register your business as when they are both so similar? Both types of corporations offer owners protection from individual liability, so shareholders (and directors, officers, and employees) are typically not personally responsible for business debts. C-Corps and S-Corps require similar paperwork. In addition, both are owned by shareholders, have a Board of Directors with annual meetings, and are managed by executive officers. It is also a requirement that both types of corporations pay annual fees, set up bylaws, and issue stock. Basically, an S-Corporation is the legal equivalent of a regular C-Corporation. Both have the same rights. They just pays taxes differently.

But why opt for an S-Corp? What are the benefits of setting up your Virginia business as an S-Corp?

The main difference between a C and S-Corporation is that an S-Corp is not treated as a disregarded entity. It is a pass-through tax entity. While a C-Corp’s tax attributes are determined at the entity level, an S-Corp determines its own income, deductions, credits, etc. It spreads out the tax attributes among its owners (or to its sole owner) as part of shared ownership. Likewise, within an S-Corporation, the profits are passed on to the shareholders, who are then taxed based on their personal returns. Unlike a C-Corporation, an S-Corporation is required to file an annual information tax return. A few other differences are that S-Corps must have no more than 100 shareholders (all individuals, not corporations), have only one class of stock, and be owned by U.S. citizens or resident aliens.

There are advantages to setting up your business as a Virginia S-Corp. Registering as an S-Corporation offers you:

  • The ability to operate as a corporation even if the owner leaves the company or passes away.
  • Pass-through taxation, as owners report their share of the profits and losses on their individual tax returns.
  • A way out of being taxed twice, the way you would be in a C-Corporation. There is no double taxation occurring--once as income and again as dividend income. You save more money!
  • The opportunity to issue shares of stock to increase the value of your business.
  • A deduction of 20% of all S-Corp income on your personal tax return, which can significantly reduce your tax burden.
  • The ability to write off the S-Corp’s losses on shareholders’ individual tax returns.
  • Annual tax filing requirements, unlike C-Corps which must file every quarter.
  • Corporate status, which means shareholders, directors, and officers are protected from sharing liability as long as there is no evidence of fraud or other misdeeds

But there are a few disadvantages to starting an S-Corp. One of those is the fact that, unlike a C-Corp, there are restrictions on ownership if you create a Virginia S-Corp. S-Corporations can only be owned by United States citizens or resident aliens. Additionally, an S-Corp permits only 100 shareholders, while for a C-Corp, there is no limit. But overall, the benefits far outweigh the setbacks, and an S-Corporation is an excellent choice for many entrepreneurs looking to start a business in Virginia.

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Learn the Benefits of an S-Corp

Educating yourself about the different types of corporations can help you assess what is the right business structure for you. It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Decide on a Registered Agent

Next, figure out who the Registered Agent for your S-Corp should be. The State of Virginia requires every S-Corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately. The Registered Agent will also act as the contact point between your S-Corp and the Secretary of States office. Once you assign someone as your Registered Agent, they can receive official correspondence and documents on behalf of your business.

A Registered Agent can be either an individual who is a resident of Virginia or a business entity that is authorized to conduct business in the state (but not your own business). This can be you or someone else within your company, but keep in mind that this person will be through whom the state has contact with your business. This agent will receive legal documents (known as “Service of Process”) that pertain to your business. You are legally required to have one.

Generally speaking, a Registered Agent in Virginia must meet the following requirements:
  • Possess a physical street address located in Virginia (no P.O. Box address).
  • Be available during regular business hours, typically Monday through Friday, 9 am to 5 pm.

Although the most comfortable option for a Virginia Registered Agent would be to name yourself, a friend, or a family member, know that this information will be public record. Not only will the information be searchable on Virginia’s Secretary of State website, it can also be republished on other sites as well. If you work from home and would much rather keep your home address private, this might not be the best choice. An alternative you can look into is hiring a Virginia Registered Agent Service. While there are a variety of commercial Virginia Registered Agent Services, for your convenience, we also offer a Registered Agent Service for a small charge that you can include as an add-on to your shopping cart.

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Decide on a Registered Agent

Next, figure out who the Registered Agent for the corporation should be. The State of Virginia requires every corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately.

Obtain an Employer
Identification Number

Next, your S-Corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Fortunately, you do not have to waste time dealing with the IRS on your own. Going through the IRS directly to get your EIN can be complicated, confusing, and frustrating. GovDocFiling alleviates the angst and aggravation of filing government documents, including apply for an EIN, or Tax ID number. Plus, GovDocFiling has one low price for same-day processing and delivery of your EIN (other Tax ID filing services charge more than $300 for same-day service!). Easily apply for your EIN/Tax ID online here. In addition, if you have any questions about obtaining an EIN, we offer 24/7 email and phone support to help you through the process. Emails are answered quickly at info@govdocfiling.com.

If you know your S-Corp will have employees, you also know that you will have to pay them. Plus, you will need to figure out the amount you should deduct from their wages for tax purposes. Employees will need to fill out a W-4 Form, and you will need to give them pay stubs with their tax information. Before this all gets overwhelming, keep in mind that we offer Payroll, Tax and HR compliance solutions with our partner, ADP. We make it easy to pay your employees, track time, and file taxes effortlessly. Plus, you and your employees can view and update payroll information via an app--accessible anywhere, anytime, backed by 24/7 live customer service support.

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Obtain an Employer Identification Number

Next, your S-Corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Submit Your Articles
of Incorporation

To create an S-Corp in Virginia, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of Virginia. It establishes the basic elements of the corporation, such as the name and address of the corporation, the number and classes of stock, and certain indemnification provisions. Prior to filing, the Articles of Incorporation must be signed by each incorporator in order to authenticate it. The document can be repealed or amended with the approval of the Board of Directors.

If filing on your own, there are usually non-refundable fees that you have to pay with check or money order, additional fees for hand-delivery of forms, and long wait times whether in person or by mail--especially if you’re filing for an S-Corp during peak season. GovDocFiling can speed up the process for you. We offer an easy online application, expedited pricing, and a free business start-up guide and resources with all filings. You can apply here today.

Once your completed Virginia Articles of Incorporation form is accepted, congratulations! Your company now exists as a recognized legal entity that is authorized to conduct business within the State of Virginia.

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Submit Your Articles of Incorporation

To create an S-Corp in Virginia, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of Virginia.

Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your S-Corporation. Basically, bylaws are rules of operation that create the company’s structure, ensuring that employees, shareholders, and executives are in the loop about how the business will be run.

Key points are covered in the corporate bylaws document, such as when annual meetings will be held, the size of your Board of Directors, and how this form will be amended if need be. In addition, member duties are explained and solutions to common disputes between parties are offered. Voting rights and salaries are discussed, and “what if” scenarios are presented. Having bylaws allows you to set up a structure that works for your business’s unique needs instead of adhering to default regulations within the state.

While bylaws are not required in some states, they are required in Virginia. It is important to establish a set of bylaws that ensure your business runs smoothly. Filling out and filing this document prior to starting an S-Corporation in Virginia provides protection for your business.

You can use this corporate bylaws generator to get a sense of what goes into a typical set of bylaws. To ensure it is done correctly, you can have a lawyer look over your bylaws prior to submission to ensure all necessary rules and scenarios are covered. Get legal advice from our partner Rocket Lawyer.

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Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your S-Corporation.

Elect a Board of Directors

Virginia law requires one or more director(s). The Board of Directors, while they are not involved in the daily tasks of running a business, represent or govern the corporation. Their duties include handling finances and fulfilling legal requirements, as well as determining the mission of the company.

People who do not work for your company can be a part of your Board of Directors. In fact, many businesses turn to lawyers or other business owners to fill in a spot on their Board of Directors. That way, they receive outside expertise from them, plus they may come with their own additional business contacts.

These board members must adhere to something called “the duty of loyalty,” which means that directors and officers of an S-Corporation can only make decisions without any personal economic conflict. The duty of loyalty is breached if something like a self-interested transaction occurs or a business opportunity is stolen. Plus, there is also the “duty of care” to consider. Members of the Board of Directors must make decisions that are in the best interests of the corporation at all times. For example, making a decision that causes serious losses for the shareholders would mean they are in violation of their duty of care and they can be sued for this.

Your board members will have to hold meetings to make important decisions, such as issuing shares or amending something in the Articles of Incorporation. The Board of Directors typically receives equal voting rights (some states, like Delaware, are an exception) when making these decisions. During the first meeting of the S-Corporation's Board of Directors, directors can appoint officers, decide on bylaws, select a corporate bank, and more. All subsequent meetings must be held annually, though, of course, if more are needed, more can be held.

Minutes of the meeting, which is the recorded documentation of what was discussed or what happened during a meeting, must be recorded to exhibit transparency in business operations, but they do not need to be filed with the state. Instead, these should be kept with your other corporate records, such as Articles of Incorporation and bylaws. These documents should be saved for at least seven years in order to protect your company.

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Elect a Board of Directors

First, familiarize yourself with the roles within an S-Corporation. There are three groups:

  • Shareholders
  • Board of Directors
  • Officers

Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything--if there are multiple shareholders and directors. If a corporation has only one shareholder or director, the decision-making, of course, falls on that person without the need for a group meeting. Officers, on the other hand, do not operate in groups. An officer holding the position of president, chief executive officer, or treasurer, for example, is an agent of the corporation and has the authority to act on behalf of the corporation on his or her own. Within smaller S-Corps, directors are sometimes also officers and shareholders. In that case, even though the same person is serving in multiple roles, each role has very different responsibilities and is treated as such.

Shareholders are the owners of the corporation, and they elect the Board of Directors. The directors, in unison, oversee and direct corporation affairs and make business decisions. They employ officers who carry out the Board of Directors’ decisions. Officers are responsible for the day-to-day operations of the company. An officer can be terminated by the Board of Directors at any time. Virginia requirements state that there should be as many officers as written in the bylaws.

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Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything - if there are multiple shareholders and directors.

Issue Stock to your Shareholders

One of the benefits of having a Virginia S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt. Unlike taking out a business loan, you do not pay interest that eats at your profits each month. The value of your business assets can be assessed by taking a look at what amount of your business assets are owned by shareholders vs. lenders. Corporations that have a higher proportion of the company owned by lenders makes an investment in the business appear riskier. If shareholders do invest in your business and purchase stock, keep in mind that if your business fails, you would have to pay back your loans and shareholders.

While there are many advantages to issuing stock, keep in mind that shareholders have an ownership stake in the company. This means that they have certain rights, such as the ability to participate in voting and the assurance that they will be collecting dividends. Profits will be shared and decisions will have to be made in unison. The more stock you issue to shareholders, the smaller your ownership in the business (and the less of a say you have in business major business decisions). On the plus side, when your business grows, you can buy out the other shareholders and get your ownership back.

Issuing stock is not a requirement for S-Corporations, but a privilege that you can make use of if you choose. Doing so can help you fund your business if you are growing and have large, expensive projects planned in the near future. In that case, you can decide how much capital you need and figure out how many shares you’d like to issue and at what price per share. You will already have a number for how many shares you have to offer (that was decided when you filed your Articles of Incorporation). To properly assess the accurate value of each share, determine your company’s net worth first. This will help you figure out what percentage of ownership you believe each share is worth.

Typically, appointed Board of Directors can issue stock whenever and to whomever, as long as the recipient has a brokerage account and is over 18 years old. But within an S-Corp, there are a few more limitations that a C-Corp does not have. While C-Corporations can be owned by any individual or legal entity--foreign or domestic--S-Corporations can only be owned by United States citizens or resident aliens. On top of that, an S-Corp does not allow an unlimited number of shareholders. It maxes out at 100. Also, S-Corps are not permitted to be owned by a C-Corp, another S-Corp, an LLC, a partnership, or many trusts. Lastly, unlike in a C-Corp where shareholders have the option between different stock classes (common, preferred, income, value, growth), an S-Corp only permits one stock class (common).

Another thing that can limit you here is if you’ve chosen to classify your S-Corp as a private corporation. This is typically a smaller corporation where the stock isn't offered to the public. A publiC-Corporation is authorized to sell their stock to the public, while a private company can’t trade its share on public stock exchanges. But a private corporation is not always small. Many big companies are privately held--such as Dell, Koch Industries, Deloitte, and Cargill. It can be harder for private corporations to raise funds, but it can be important in order to maintain family ownership.

Whoever your corporation may sell stock to, it’s important to have a shareholder agreement for protection. This would explain the shareholder’s rights and voting power within the S-Corporation. You will want to decide and let you shareholders know what kind of say they have in the organization or management of the company when they are issued stock. Virginia requires an annual shareholder meeting--unless directors are elected by written consent.

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Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt.

Familiarize Yourself with the
State’s Taxes and Licenses

All pass-through entities that do business in the State of Virginia, including S-Corps, must file an income tax return. Any entity that is deemed separate from the individual for federal income tax purposes requires that all owners report their shares of the entity's income, gains, losses, etc. on their own returns. The Virginia Tax Government website goes into more detail.

There are also other various taxes. For example, Virginia has a sales and use tax rate of 4.3%, but it changes per city and/or municipality. Different regions are allowed to collect their own rate that can get up to 1% in city sales tax. More info on sales tax here.

In addition, there may be extra fees for certain insurances, permits, and licenses, depending on the state’s laws and the type of business you own. Depending on your type of business, you may need worker’s compensation, unemployment insurance, building permits, etc. Keep in mind that different cities or counties may require certain permits and licenses that other regions do not. For example, if you are opening a business in the city of Virginia Beach, the Virginia Beach Planning Department has a Permits and Inspections page with a list of most common permits. The Commissioner of Revenue issues all business licenses. Talking to the Commissioner of Revenue at the Business License Division is a good idea to learn more about specific licenses for each city: 757-385-4515, 8am-5pm, Monday through Friday. Contact your city or county to see if there are any insurances, permits, or licenses you might need to obtain before you begin operating your business.


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Familiarize Yourself with the State’s Taxes and Licenses

All pass-through entities that do business in the State of Virginia, including S-Corps, must file an income tax return. Any entity that is deemed separate from the individual for federal income tax purposes requires that all owners report their shares of the entity's income, gains, losses, etc. on their own returns.

File an Annual Renewal

Like most states, the State of Virginia requires all S-Corp owners to file a report that updates all the information that the Office of the Clerk has on file. This is called the Annual Report and it is submitted every year. Each year, the Commission prepares the corporation’s Annual Report, using information on its records from the last Annual Report. The Annual Report is sent to the Virginia S-Corp Registered Agent, who is responsible for forwarding it to the corporation members. Each Annual Report is due annually by the last day of the anniversary month the business was registered, along with a fee payable to the Office of the Clerk in Virginia. This fee varies - $100 to $1,700 - depending on the number of authorized shares.

Virginia S-Corp filing is available online or via paper; instructions for both can be found on the Virginia Office of the Clerk website. Filing an Annual Report is necessary for maintaining an active status after starting an S-Corp in Virginia. Not filing the report or paying the fee will result in being presented a Virginia corp dissolution form, after which the state will dissolve your business.

Annual Reports can be rather complex–requiring the deciphering of gross receipts, dividends, interest, losses, and all Virginia S-Corp fees–and you should seek the help of an accountant to ensure that it is filled out properly. Our partner, Bench, will provide you with a team of accountants to help you with your franchise tax reports, as well as general bookkeeping services with monthly financial statements and intuitive software to monitor your business profits and expenses.

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File an Annual Renewal

Like most states, the State of Virginia requires all S-Corp owners to file a report that updates all the information that the Office of the Clerk has on file. This is called the Annual Report and it is submitted every year. Each year, the Commission prepares the corporation’s Annual Report, using information on its records from the last Annual Report.

Raise Funds for Your Corporation

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business. Some of the most commonly-used options for obtaining funding for your S-Corp are:

  • Personal savings and assets
  • Informal loans from family and friends
  • Peer-to-peer lending sites or crowdfunding
  • Conventional bank loan
  • Short-term credit card loans
  • Government-sponsored grants/loan programs
  • Issuing stock to shareholders
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Personal Saving/Assets

Use your own savings, liquidate your assets, refinance your home, borrow your Roth IRA, etc.

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Informal Loans From Family/Friends

Ask friends or family members if they would be willing to invest in your business.

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Peer-to-Peer Landing Sites

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

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Conventional Bank Loan

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

Many new S-Corporation owners begin with their savings to fund their new business venture. If your savings are not enough, you may need to look into liquidating your personal assets or use them as collateral for loans. Can you sell your property or refinance your home? Do you have a retirement account such as a Traditional or Roth IRA? Usually, you can withdraw contributions you made to your IRA anytime, tax- and penalty-free, but that is not always the case. Find out what kind of fees your particular retirement plan will hit you with before using your IRA to fund your business.

Next, look into whether you know someone who shares your passion for your business and has the ability to contribute financially to your dream. These personal connections may want to support your startup idea. Although accepting an informal loan from a close friend or relative may feel safe, you should still protect yourself in case your relationship with the friend or family member goes sour. Have an official contract drawn up that all parties agree to. You can choose to have it notarized and have witnesses present for extra protection.

If you prefer not to borrow from friends and family, you can turn to a peer-to-peer (P2P) or social lending website. A P2P site is a place where investors seek out alternative opportunities to invest outside of stocks and bonds. You can apply for a loan and investors can decide whether or not they wish to fund your proposed business through interest-based loans. You can also look into crowdfunding, which is a way for small businesses or startups to raise money online through donations. These options typically require the ability to promote your business well, ensure complete transparency of where the funds go, and sometimes, the possibility of giving up ownership of a piece of your business. Make sure you look into all of the specifics.

You might be hoping to rely on a conventional loan from a bank, credit union or other lending institution for your main source of funds. In this case, you would need a formal business plan to present during your loan application process. If approved, you would be required to sign a legal contract, or a Promissory Note, outlining your obligations to the lender (which would primarily entail regular payments until the loan is paid off). If you are a first-time business owner, it is likely that you may be rejected initially. In that case, you can improve your application and reapply, or look into alternative sources of funding such as short-term financing via credit cards.

Using a credit card as a means of obtaining a fast and easy business loan would grant you use of immediate funds without the hassle and paperwork of loan applications or business plans. This is the best option for a brand new business, and we work with Nav to give our customers access to the credit they need. Visit our financing page and fill out the form for more information.

There are many credit cards that have low or no annual fees, low introductory interest rates, and other rewards depending on your spending. But be careful: make sure you pay back your credit card before the promotional low interest rate expires and skyrockets, or prior to having to pay large annual fees. And don’t make large purchases that can take years to pay back. For example, getting an equipment loan to purchase a piece of equipment is smarter than putting it on a credit card. Credit cards can be a good temporary solution if your business plan will allow you to pay back the debt quickly.

Another option at your disposal is a government-sponsored grant or loan program. Traditional lenders can turn to federal, state, or local governments to finance their business if such a grant or program is available. Typically, these programs consider sponsoring specific type of businesses or certain business owners, so be sure to research what government-sponsored loan your particular business or you might be eligible for.


Lastly, you can invite people to your team. S-Corporations may have a single person as the company's owner, or an unlimited number of shareholders participating in the ownership of the business. If you could see your businesses strategy succeeding with a partner or multiple partners, pool together your financial resources with another member to support your startup. An advantage to this funding option is your partner(s) may come with their own social network of business contacts and possibly even their own potential investors. To protect yourself, you can adjust your bylaws and ensure that you are still the primary owner of the S-Corp.

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Raise Funds for Your S-Corp

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business.

Create a Business Website

Creating a website for your business is not a Virginia S-Corp requirement, but it is recommended to any business owner operating in the modern world. An online presence is important to have and maintain in order to ensure that your customers trust your company and know they will receive good customer service. Having a website gives your business legitimacy; your customers will visit your website and see that you are a real company with an actual website where they can read about the company’s origin and products/services and access contact information. Being able to read up on a company on their website leads to trust between a consumer and an organization. Also, dependable customer service is often offered through a website. By offering an email address, a contact form, and/or live chat with a representative on your website, you are making it easy for a customer to get connected with someone knowledgeable about the product/service. That allows a customer to know that there is a real person who cares about their satisfaction within the company that they are doing business with.

Start S-Corp formation

If the website is outdated or there is no website, a consumer may feel that you are not a legitimate business but a scam with no licenses to back up your business’ operations. You can avoid losing customers due to not having a professional website by ensuring that you have one. We work with GoNorth Websites to provide new businesses with high quality, cost-effective websites. Find out more about our custom designed, written, and developed websites, plus optional internet marketing add-ons that help you grow your business.

But websites needs maintenance too. You can’t simply have one created and never update it throughout the years. Policies and terms change, companies grow, products/services improve, and all of that (and more) can be reflected on the website. This keeps your customers up-to-date and offers a personal touch that is valued by any consumer.

In addition, you can look into having a blog or utilizing social media as another means of keeping your customers in-the-know and offering them a way to interact with your company. An online and/or social media presence can also lead to responsive customers who can offer you feedback on how you’re doing—plus, it’ll help get your company’s name out there.

If this all sounds like more than you’d like to deal with on your own, know that you can hire someone to maintain your website and social media presence for you—just like you can hire customer representatives to handle all correspondence. You can employ a web agency to monitor your website and/or a social media marketing agency to manage your social media campaign. A social media campaign is a coordinated marketing plan that can assist you with your business goals, which translates into extra advertising for your new business. Marketing your company can help you have a more profitable business and can aid you with paying back your business loans quicker—something any business owner aims for. Regardless of industry, all businesses should consider having a website as part of the first steps of starting a business.

The Benefits of Having an Online Presence
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You will show your customers that you are a legitimate business and build trust.
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Your company will be easy to correspond with and you can provide good, responsive customer service.
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Your customers will be kept up-to-date on all exciting news related to your business.


If you’ve decided that you want to have a website for your business, keep a few things in mind. When coming up with a website name, make sure that the domain contains your business name and is easy to type and remember for future visits. If you come up with a great web domain that you’d like to use for your business but you don’t plan to create a business website today, you may want to buy the URL to prevent others from acquiring it.

While brainstorming website URLs for your website, you’re going to either realize that you already know what your business is going to be named or that you have no idea what or how to name your business. Here are a few quick Virginia corporation name tips:

  • Follow S-Corp naming guidelines. A corporation’s name usually has to include words, like Corporation, Incorporated, Company, or Limited; or abbreviations, like Corp., Inc., Co., or Ltd. It’s also important not to use any words or phrases that will make it easy for someone to mistake your company for a federal agency; think “State Department.”
  • Find a unique name. If you’re getting an S-Corp in Virginia you will need an original name that is not in use by another corporation. To check if a name has already been taken, you can search the Business Name Search Database.
  • Make sure it is available as a web domain. This way, you can find out if another company outside of Virginia has a corporation with the same name. In that case, think of something more original.
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Create a Business Website

Creating a website for your business is not a Virginia S-Corp requirement, but it is recommended to any business owner operating in the modern world. An online presence is important to have and maintain in order to ensure that your customers trust your company and know they will receive good customer service.

Begin Operating Your Business

Once you become an official S-Corporation in the state of Virginia, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings. This is mandatory if you don’t want your new business to run into any issues. If you’d rather not do these tasks yourself, you can sign up for a service that will automatically send you alerts ahead of crucial state and federal filing deadlines. Likewise, you can hire an accountant, a tax professional, and/or an attorney to ensure you are not making errors when keeping records, filling out paperwork, and making payments.

Next, make sure you’ve obtained all necessary permits, licenses, and insurances that your VA corp might need—and you’re good to go! Begin operating your Virginia business with peace of mind, knowing that you are protected by an S-Corp in case anything unforeseeable affects your new business venture.

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Begin Operating Your Business

Once you become an official S-Corporation in the state of Virginia, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings.


Vermont S-Corp

Learn the Benefits of an S-Corp

When you decide to start a business, there are a number of business entities to choose from. Each has its own advantages and disadvantages, which we will introduce to you here. Prospective business owners should consult with professionals, such as a business attorney and accountants, before making the final decision. But educating yourself about the different types of corporations can help you assess what is the right business structure for you beforehand.

But first, are you ready to incorporate? It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Typically, “material size” means a business with revenue above $100,000. Once you know you’re ready, you have the option between choosing to classify your business as a C-Corporation or an S-Corporation. While S-Corps used to be the way to go for small businesses (it’s even been nicknamed the “Small BusinesS-Corporation”), thanks to the 2017 Tax Cuts and Jobs Act, C-Corps may now offer lower corporate tax rates to smaller business. Now, S-Corps are sometimes advisable for larger businesses. But keep in mind that C-Corps give you more options to expand and raise money, which can be very beneficial to a larger business. You may want to discuss the differences with a financial advisor or lawyer who can help break down all of the costs to help you assess what will work best for you.

Whether you choose to structure your business entity as a C or S-Corporation will determine how much you’ll pay in taxes, the ways you’re permitted to raise money, and the ease with which you can expand as your business grows. The standard and most common type of corporation is a C-Corporation. In fact, a C-Corp is the default type of corporation, and all S-Corps begin as a C-Corp or LLC. When you initially incorporate, your company will automatically become a standard C-Corp, and only after you file Form 8832 or Form 2553 can you transition to an S-Corp for federal tax purposes.

Why is an S-Corp a good idea for an e-commerce Business?

If there is an issue with a product, an S-Corp protects you. Compensation can only be taken from the S-Corp’s assets, not your personal assets.

Start Your S-Corp Now
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How do you know which type of corporation you want to register your business as when they are both so similar? Both types of corporations offer owners protection from individual liability, so shareholders (and directors, officers, and employees) are typically not personally responsible for business debts. C-Corps and S-Corps require similar paperwork. In addition, both are owned by shareholders, have a Board of Directors with annual meetings, and are managed by executive officers. It is also a requirement that both types of corporations pay annual fees, set up bylaws, and issue stock. Basically, an S-Corporation is the legal equivalent of a regular C-Corporation. Both have the same rights. They just pays taxes differently.

But why opt for an S-Corp? What are the benefits of setting up your Vermont business as an S-Corp?

The main difference between a C and S-Corporation is that an S-Corp is not treated as a disregarded entity. It is a pass-through tax entity. While a C-Corp’s tax attributes are determined at the entity level, an S-Corp determines its own income, deductions, credits, etc. It spreads out the tax attributes among its owners (or to its sole owner) as part of shared ownership. Likewise, within an S-Corporation, the profits are passed on to the shareholders, who are then taxed based on their personal returns. Unlike a C-Corporation, an S-Corporation is required to file an annual information tax return. A few other differences are that S-Corps must have no more than 100 shareholders (all individuals, not corporations), have only one class of stock, and be owned by U.S. citizens or resident aliens.

There are advantages to setting up your business as a Vermont S-Corp. Registering as an S-Corporation offers you:

  • The ability to operate as a corporation even if the owner leaves the company or passes away.
  • Pass-through taxation, as owners report their share of the profits and losses on their individual tax returns.
  • A way out of being taxed twice, the way you would be in a C-Corporation. There is no double taxation occurring--once as income and again as dividend income. You save more money!
  • The opportunity to issue shares of stock to increase the value of your business.
  • A deduction of 20% of all S-Corp income on your personal tax return, which can significantly reduce your tax burden.
  • The ability to write off the S-Corp’s losses on shareholders’ individual tax returns.
  • Annual tax filing requirements, unlike C-Corps which must file every quarter.
  • Corporate status, which means shareholders, directors, and officers are protected from sharing liability as long as there is no evidence of fraud or other misdeeds

But there are a few disadvantages to starting an S-Corp. One of those is the fact that, unlike a C-Corp, there are restrictions on ownership if you create a Vermont S-Corp. S-Corporations can only be owned by United States citizens or resident aliens. Additionally, an S-Corp permits only 100 shareholders, while for a C-Corp, there is no limit. But overall, the benefits far outweigh the setbacks, and an S-Corporation is an excellent choice for many entrepreneurs looking to start a business in Vermont.

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Learn the Benefits of an S-Corp

Educating yourself about the different types of corporations can help you assess what is the right business structure for you. It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Decide on a Registered Agent

Next, figure out who the Registered Agent for the corporation should be. The State of Vermont requires every corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately. The Registered Agent will also act as the contact point between the Vermont Secretary of State and the corporation. Once you assign someone as your Registered Agent, they can receive official correspondence and documents on behalf of your business. 

A Registered Agent can be either an individual who is a resident of Vermont or a business entity that is authorized to conduct business in the state (but not your own business). This can be you or someone else within your company, but keep in mind that this person will be through whom the state has contact with your business. This agent will receive legal documents (known as “Service of Process”) that pertain to your business. Your Registered Agent’s information would go on your most important Vermont Secretary of State corporation forms.

Generally speaking, a Registered Agent in Vermont must meet the following requirements:
  • Possess a physical street address located in Vermont (no P.O. Box address).
  • Be available during regular business hours, typically Monday through Friday, 9 am to 5 pm.

Although the most comfortable option for a Vermont Registered Agent would be to name yourself, a friend, or a family member, know that this information will be public record. Not only will the information be searchable on Vermont’S-Corporation website, it can also be republished on other sites as well. If you work from home and would much rather keep your home address private, this might not be the best choice. An alternative you can look into is hiring a Vermont Registered Agent Service. We also offer a Registered Agent Service for a small charge that you can include as an add-on to your shopping cart.

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Decide on a Registered Agent

Next, figure out who the Registered Agent for the corporation should be. The State of Vermont requires every corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately.

Obtain an Employer
Identification Number

Next, your Vermont S-corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Fortunately, you do not have to waste time dealing with the IRS on your own. Going through the IRS directly to get your EIN can be complicated, confusing, and frustrating. GovDocFiling alleviates the angst and aggravation of filing government documents, including apply for an EIN, or Tax ID number. Plus, GovDocFiling has one low price for same-day processing and delivery of your EIN (other Tax ID filing services charge more than $300 for same-day service!). Easily apply for your EIN/Tax ID online here. In addition, if you have any questions about obtaining an EIN, we offer 24/7 email and phone support to help you through the process. Emails are answered quickly at info@govdocfiling.com.

If you know your S-Corp will have employees, you also know that you will have to pay them. Plus, you will need to figure out the amount you should deduct from their wages for tax purposes. Employees will need to fill out a W-4 Form, and you will need to give them pay stubs with their tax information. Before this all gets overwhelming, keep in mind that we offer Payroll, Tax and HR compliance solutions with our partner, ADP. We make it easy to pay your employees, track time, and file taxes effortlessly. Plus, you and your employees can view and update payroll information via an app--accessible anywhere, anytime, backed by 24/7 live customer service support.

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Obtain an Employer Identification Number

Next, your S-Corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Submit Your Articles
of Incorporation

To create an S-Corp in Vermont, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of Vermont. It establishes the basic elements of the corporation, such as the name and address of the corporation, the number and classes of stock, and certain indemnification provisions. Prior to filing, the Articles of Incorporation must be signed by each incorporator in order to authenticate it. The document can be repealed or amended with the approval of the Board of Directors.

If filing on your own, there are usually non-refundable fees that you have to pay with check or money order, additional fees for hand-delivery of forms, and long wait times whether in person or by mail--especially if you’re filing for an S-Corp during peak season. GovDocFiling can speed up the process for you. We offer an easy online application, expedited pricing, and a free business start-up guide and resources with all filings. You can apply here today.

Once your completed Vermont Articles of Incorporation form is accepted, congratulations! Your company now exists as a recognized legal entity that is authorized to conduct business within the State of Vermont.

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Submit Your Articles of Incorporation

To create an S-Corp in Vermont, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of Vermont.

Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your VT S-Corp. Basically, bylaws are rules of operation that create the company’s structure, ensuring that employees, shareholders, and executives are in the loop about how the business will be run.

Key points are covered in the corporate bylaws document, such as when annual meetings will be held, the size of your Board of Directors, and how this form will be amended if need be. In addition, member duties are explained and solutions to common disputes between parties are offered. Voting rights and salaries are discussed, and “what if” scenarios are presented. Having bylaws allows you to set up a structure that works for your business’s unique needs instead of adhering to default regulations within the state.

While bylaws are not required in most states, they are required in Vermont. It is important to establish a set of bylaws that ensure your business runs smoothly. Filling out and filing this document prior to starting an S-Corporation in Vermont provides protection for your business.

You can use this corporate bylaws generator to get a sense of what goes into a typical set of bylaws. To ensure it is done correctly, you can have a lawyer look over your bylaws prior to submission to ensure all necessary rules and scenarios are covered. Get legal advice from our partner Rocket Lawyer.

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Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your S-Corporation.

Elect a Board of Directors

Vermont law requires one or more director(s). The Board of Directors, while they are not involved in the daily tasks of running a business, represent or govern the corporation. Their duties include handling finances and fulfilling legal requirements, as well as determining the mission of the company.

People who do not work for your company can be a part of your Board of Directors. In fact, many businesses turn to lawyers or other business owners to fill in a spot on their Board of Directors. That way, they receive outside expertise from them, plus they may come with their own additional business contacts.

These board members must adhere to something called “the duty of loyalty,” which means that directors and officers of an S-Corporation can only make decisions without any personal economic conflict. The duty of loyalty is breached if something like a self-interested transaction occurs or a business opportunity is stolen. Plus, there is also the “duty of care” to consider. Members of the Board of Directors must make decisions that are in the best interests of the corporation at all times. For example, making a decision that causes serious losses for the shareholders would mean they are in violation of their duty of care and they can be sued for this.

Your board members will have to hold meetings to make important decisions, such as issuing shares or amending something in the Articles of Incorporation. The Board of Directors typically receives equal voting rights (some states, like Delaware, are an exception) when making these decisions. During the first meeting of the S-Corporation's Board of Directors, directors can appoint officers, decide on bylaws, select a corporate bank, and more. All subsequent meetings must be held annually, though, of course, if more are needed, more can be held.

Minutes of the meeting, which is the recorded documentation of what was discussed or what happened during a meeting, must be recorded to exhibit transparency in business operations, but they do not need to be filed with the state. Instead, these should be kept with your other corporate records, such as Articles of Incorporation and bylaws. These documents should be saved for at least seven years in order to protect your company.

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Elect a Board of Directors

First, familiarize yourself with the roles within an S-Corporation. There are three groups:

  • Shareholders
  • Board of Directors
  • Officers

Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything--if there are multiple shareholders and directors. If a corporation has only one shareholder or director, the decision-making, of course, falls on that person without the need for a group meeting. Officers, on the other hand, do not operate in groups. An officer holding the position of president, chief executive officer, or treasurer, for example, is an agent of the corporation and has the authority to act on behalf of the corporation on his or her own. Within smaller S-Corps, directors are sometimes also officers and shareholders. In that case, even though the same person is serving in multiple roles, each role has very different responsibilities and is treated as such.

Shareholders are the owners of the corporation, and they elect the Board of Directors. The directors, in unison, oversee and direct corporation affairs and make business decisions. They employ officers who carry out the Board of Directors’ decisions. Officers are responsible for the day-to-day operations of the company. An officer can be terminated by the Board of Directors at any time. Vermont requirements state that there should be as many officers as stated in the bylaws. One person may hold multiple offices. If there are multiple officers, one officer is responsible for maintaining all corporate records.

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Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything - if there are multiple shareholders and directors.

Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt. Unlike taking out a business loan, you do not pay interest that eats at your profits each month. The value of your business assets can be assessed by taking a look at what amount of your business assets are owned by shareholders vs. lenders. Corporations that have a higher proportion of the company owned by lenders makes an investment in the business appear riskier. If shareholders do invest in your business and purchase stock, keep in mind that if your business fails, you would have to pay back your loans and shareholders.

While there are many advantages to issuing stock, keep in mind that shareholders have an ownership stake in the company. This means that they have certain rights, such as the ability to participate in voting and the assurance that they will be collecting dividends. Profits will be shared and decisions will have to be made in unison. The more stock you issue to shareholders, the smaller your ownership in the business (and the less of a say you have in business major business decisions). On the plus side, when your business grows, you can buy out the other shareholders and get your ownership back.

Issuing stock is not a requirement for S-Corporations, but a privilege that you can make use of if you choose. Doing so can help you fund your business if you are growing and have large, expensive projects planned in the near future. In that case, you can decide how much capital you need and figure out how many shares you’d like to issue and at what price per share. You will already have a number for how many shares you have to offer (that was decided when you filed your Articles of Incorporation). To properly assess the accurate value of each share, determine your company’s net worth first. This will help you figure out what percentage of ownership you believe each share is worth.

Typically, appointed Board of Directors can issue stock whenever and to whomever, as long as the recipient has a brokerage account and is over 18 years old. But within an S-Corp, there are a few more limitations that a C-Corp does not have. While C-Corporations can be owned by any individual or legal entity--foreign or domestic--S-Corporations can only be owned by United States citizens or resident aliens. On top of that, an S-Corp does not allow an unlimited number of shareholders. It maxes out at 100. Also, S-Corps are not permitted to be owned by a C-Corp, another S-Corp, an LLC, a partnership, or many trusts. Lastly, unlike in a C-Corp where shareholders have the option between different stock classes (common, preferred, income, value, growth), an S-Corp only permits one stock class (common).

Another thing that can limit you here is if you’ve chosen to classify your S-Corp as a private corporation. This is typically a smaller corporation where the stock isn't offered to the public. A publiC-Corporation is authorized to sell their stock to the public, while a private company can’t trade its share on public stock exchanges. But a private corporation is not always small. Many big companies are privately held--such as Dell, Koch Industries, Deloitte, and Cargill. It can be harder for private corporations to raise funds, but it can be important in order to maintain family ownership.

Whoever your corporation may sell stock to, it’s important to have a shareholder agreement for protection. This would explain the shareholder’s rights and voting power within the S-Corporation. You will want to decide and let you shareholders know what kind of say they have in the organization or management of the company when they are issued stock. Like most states, Vermont requires an annual shareholder meeting.

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Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt.

Familiarize Yourself with the
State’s Taxes and Licenses

Income from pass-through entities, such as a Vermont Limited Liability Company and Vermont S-Corp, “passes through” the business to the owners, who are required to report this information on their personal tax returns. In that case, each individual S-Corp member would then have to pay taxes on his or her share of the S-Corp’s income. The S-Corp itself does not pay federal income taxes, but Vermont’s personal income tax rates range from 3.55% to 9.4%.There is also a business entity income tax that applies to Vermont S-corporations, Partnerships, and Limited Liability Companies if they elect to be taxed as partnerships or S-Corporations. More information can be found here.

There are other various taxes that the business will have to pay. For example, if you have employees, you will have to pay an employer tax, and if your business sells goods or services, you will have to pay a sales and use tax. View additional Vermont taxes on the Department of Taxes website.

In addition, there may be extra fees for certain insurances, permits, and licenses, depending on the state’s laws and the type of business you own. For example, you may need worker’s compensation, unemployment insurance, building permits, etc. Licenses for certain professions can be found either on the Vermont Government website or the Vermont Secretary of State website. Find out the requirements for S-Corps in the state you plan to run your business in. Keep in mind that different cities or counties may require certain permits and licenses that other regions do not. Contact your city or county to see if there are any insurances, permits, or licenses you might need to obtain before you begin operating your business.

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Familiarize Yourself with the State’s Taxes and Licenses

Income from pass-through entities, such as a Vermont Limited Liability Company and Vermont S-Corp, “passes through” the business to the owners, who are required to report this information on their personal tax returns. In that case, each individual S-Corp member would then have to pay taxes on his or her share of the S-Corp’s income.

File an Annual Renewal

Like most states, the State of Vermont requires all S-Corp owners to file a report that updates all the information that the Vermont Secretary of State has on file. This is called the Annual Report and it is submitted every year. Each Annual Report is due annually within two and a half months after the end of your fiscal year (usually March 15), along with a Vermont S-Corp annual fee of $45.

Vermont S-Corp filing is available online on the Vermont Secretary of State website. Filing an Annual Report is necessary for maintaining an active status after starting an S-Corp in Vermont. Not filing the report or paying the fee will result in being presented a Vermont S-Corp dissolution form, after which the state will dissolve your business.

Annual Reports can be rather complex–requiring the deciphering of gross receipts, dividends, interest, losses, and all Vermont S-Corp fees–and you should seek the help of an accountant to ensure that it is filled out properly. Our partner, Bench, will provide you with a team of accountants to help you with your franchise tax reports, as well as general bookkeeping services with monthly financial statements and intuitive software to monitor your business profits and expenses.

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File an Annual Renewal

Like most states, the State of Vermont requires all S-Corp owners to file a report that updates all the information that the Vermont Secretary of State has on file. This is called the Annual Report and it is submitted every year.

Raise Funds for Your Corporation

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business. Some of the most commonly-used options for obtaining funding for your S-Corp are:

  • Personal savings and assets
  • Informal loans from family and friends
  • Peer-to-peer lending sites or crowdfunding
  • Conventional bank loan
  • Short-term credit card loans
  • Government-sponsored grants/loan programs
  • Issuing stock to shareholders
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Personal Saving/Assets

Use your own savings, liquidate your assets, refinance your home, borrow your Roth IRA, etc.

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Informal Loans From Family/Friends

Ask friends or family members if they would be willing to invest in your business.

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Peer-to-Peer Landing Sites

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

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Conventional Bank Loan

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

Many new S-Corporation owners begin with their savings to fund their new business venture. If your savings are not enough, you may need to look into liquidating your personal assets or use them as collateral for loans. Can you sell your property or refinance your home? Do you have a retirement account such as a Traditional or Roth IRA? Usually, you can withdraw contributions you made to your IRA anytime, tax- and penalty-free, but that is not always the case. Find out what kind of fees your particular retirement plan will hit you with before using your IRA to fund your business.

Next, look into whether you know someone who shares your passion for your business and has the ability to contribute financially to your dream. These personal connections may want to support your startup idea. Although accepting an informal loan from a close friend or relative may feel safe, you should still protect yourself in case your relationship with the friend or family member goes sour. Have an official contract drawn up that all parties agree to. You can choose to have it notarized and have witnesses present for extra protection.

If you prefer not to borrow from friends and family, you can turn to a peer-to-peer (P2P) or social lending website. A P2P site is a place where investors seek out alternative opportunities to invest outside of stocks and bonds. You can apply for a loan and investors can decide whether or not they wish to fund your proposed business through interest-based loans. You can also look into crowdfunding, which is a way for small businesses or startups to raise money online through donations. These options typically require the ability to promote your business well, ensure complete transparency of where the funds go, and sometimes, the possibility of giving up ownership of a piece of your business. Make sure you look into all of the specifics.

You might be hoping to rely on a conventional loan from a bank, credit union or other lending institution for your main source of funds. In this case, you would need a formal business plan to present during your loan application process. If approved, you would be required to sign a legal contract, or a Promissory Note, outlining your obligations to the lender (which would primarily entail regular payments until the loan is paid off). If you are a first-time business owner, it is likely that you may be rejected initially. In that case, you can improve your application and reapply, or look into alternative sources of funding such as short-term financing via credit cards.

Using a credit card as a means of obtaining a fast and easy business loan would grant you use of immediate funds without the hassle and paperwork of loan applications or business plans. This is the best option for a brand new business, and we work with Nav to give our customers access to the credit they need. Visit our financing page and fill out the form for more information.

There are many credit cards that have low or no annual fees, low introductory interest rates, and other rewards depending on your spending. But be careful: make sure you pay back your credit card before the promotional low interest rate expires and skyrockets, or prior to having to pay large annual fees. And don’t make large purchases that can take years to pay back. For example, getting an equipment loan to purchase a piece of equipment is smarter than putting it on a credit card. Credit cards can be a good temporary solution if your business plan will allow you to pay back the debt quickly.

Another option at your disposal is a government-sponsored grant or loan program. Traditional lenders can turn to federal, state, or local governments to finance their business if such a grant or program is available. Typically, these programs consider sponsoring specific type of businesses or certain business owners, so be sure to research what government-sponsored loan your particular business or you might be eligible for.


Lastly, you can invite people to your team. S-Corporations may have a single person as the company's owner, or an unlimited number of shareholders participating in the ownership of the business. If you could see your businesses strategy succeeding with a partner or multiple partners, pool together your financial resources with another member to support your startup. An advantage to this funding option is your partner(s) may come with their own social network of business contacts and possibly even their own potential investors. To protect yourself, you can adjust your bylaws and ensure that you are still the primary owner of your Vermont S-Corporation.

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Raise Funds for Your S-Corp

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business.

Create a Business Website

Creating a website for your Vermont business is not a requirement but it is recommended to any business owner operating in the modern world. An online presence is important to have and maintain in order to ensure that your customers trust your company and know they will receive good customer service. Having a website gives your business legitimacy; your customers will visit your website and see that you are a real company with an actual website where they can read about the company’s origin and products/services and access contact information. Being able to read up on a company on their website leads to trust between a consumer and an organization. Also, dependable customer service is often offered through a website. By offering an email address, a contact form, and/or live chat with a representative on your website, you are making it easy for a customer to get connected with someone knowledgeable about the product/service. That allows a customer to know that there is a real person who cares about their satisfaction within the company that they are doing business with.

Start S-Corp formation

If the website is outdated or there is no website, a consumer may feel that you are not a legitimate business but a scam with no licenses to back up your business’ operations. You can avoid losing customers due to not having a professional website by ensuring that you have one. We work with GoNorth Websites to provide new businesses with high quality, cost-effective websites. Find out more about our custom designed, written, and developed websites, plus optional internet marketing add-ons that help you grow your business.

But websites needs maintenance too. You can’t simply have one created and never update it throughout the years. Policies and terms change, companies grow, products/services improve, and all of that (and more) can be reflected on the website. This keeps your customers up-to-date and offers a personal touch that is valued by any consumer.

In addition, you can look into having a blog or utilizing social media as another means of keeping your customers in-the-know and offering them a way to interact with your company. An online and/or social media presence can also lead to responsive customers who can offer you feedback on how you’re doing—plus, it’ll help get your company’s name out there.

If this all sounds like more than you’d like to deal with on your own, know that you can hire someone to maintain your website and social media presence for you—just like you can hire customer representatives to handle all correspondence. You can employ a web agency to monitor your website and/or a social media marketing agency to manage your social media campaign. A social media campaign is a coordinated marketing plan that can assist you with your business goals, which translates into extra advertising for your new business. Marketing your company can help you have a more profitable business and can aid you with paying back your business loans quicker—something any business owner aims for. Regardless of industry, all businesses should consider having a website as part of the first steps of starting a business.

The Benefits of Having an Online Presence
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You will show your customers that you are a legitimate business and build trust.
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Your company will be easy to correspond with and you can provide good, responsive customer service.
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Your customers will be kept up-to-date on all exciting news related to your business.


If you’ve decided that you want to have a website for your business, keep a few things in mind. When coming up with a website name, make sure that the domain contains your business name and is easy to type and remember for future visits. If you come up with a great web domain that you’d like to use for your business but you don’t plan to create a business website today, you may want to buy the URL to prevent others from acquiring it.

While brainstorming website URLs for your website, you’re going to either realize that you already know what your business is going to be named or that you have no idea what or how to name your business. Here are a few Vermont corp name tips:

  • Follow S-Corp naming guidelines. A corporation’s name usually has to include words, like Corporation, Incorporated, Company, or Limited; or abbreviations, like Corp., Inc., Co., or Ltd. It’s also important not to use any words or phrases that will make it easy for someone to mistake your company for a federal agency; think “State Department.”
  • Find a unique name. If you’re getting an S-Corp in Vermont you will need an original name that is not in use by another corporation. To check if a name has already been taken, you can search the Business Name Search Database.
  • Make sure it is available as a web domain. This way, you can find out if another company outside of Vermont has a corporation with the same name. In that case, think of something more original.
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Create a Business Website

Creating a website for your Vermont business is not a requirement but it is recommended to any business owner operating in the modern world. An online presence is important to have and maintain in order to ensure that your customers trust your company and know they will receive good customer service.

Begin Operating Your Business

Once you become an official Vermont corporation, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings. This is mandatory if you don’t want your new business to run into any issues. If you’d rather not do these tasks yourself, you can sign up for a service that will automatically send you alerts ahead of crucial state and federal filing deadlines. Likewise, you can hire an accountant, a tax professional, and/or an attorney to ensure you are not making errors when keeping records, filling out paperwork, and making payments.

Next, make sure you’ve obtained all necessary permits, licenses, and insurances that your VT corp might need — and you’re good to go! Begin operating your Vermont business with peace of mind, knowing that you are protected by an S-Corp in case anything unforeseeable affects your new business venture.

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Begin Operating Your Business

Once you become an official Vermont corporation, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings.


Utah S-Corp

Learn the Benefits of an S-Corp

When you decide to start a business, there are a number of business entities to choose from. Each has its own advantages and disadvantages, which we will introduce to you here. Prospective business owners should consult with professionals, such as a business attorney and accountants, before making the final decision. But educating yourself about the different types of corporations can help you assess what is the right business structure for you beforehand.

But first, are you ready to incorporate? It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Typically, “material size” means a business with revenue above $100,000. Once you know you’re ready, you have the option between choosing to classify your business as a C-Corporation or an S-Corporation. While S-Corps used to be the way to go for small businesses (it’s even been nicknamed the “Small BusinesS-Corporation”), thanks to the 2017 Tax Cuts and Jobs Act, C-Corps may now offer lower corporate tax rates to smaller business. Now, S-Corps are sometimes advisable for larger businesses. But keep in mind that C-Corps give you more options to expand and raise money, which can be very beneficial to a larger business. You may want to discuss the differences with a financial advisor or lawyer who can help break down all of the costs to help you assess what will work best for you.

Whether you choose to structure your business entity as a C or S-Corporation will determine how much you’ll pay in taxes, the ways you’re permitted to raise money, and the ease with which you can expand as your business grows. The standard and most common type of corporation is a C-Corporation. In fact, a C-Corp is the default type of corporation, and all S-Corps begin as a C-Corp or LLC. When you initially incorporate, your company will automatically become a standard C-Corp, and only after you file multiple forms can you transition to an S-Corp for federal tax purposes.

Why is an S-Corp a good idea for an e-commerce Business?

If there is an issue with a product, an S-Corp protects you. Compensation can only be taken from the S-Corp’s assets, not your personal assets.

Start Your S-Corp Now
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How do you know which type of corporation you want to register your business as when they are both so similar? Both types of corporations offer owners protection from individual liability, so shareholders (and directors, officers, and employees) are typically not personally responsible for business debts. C-Corps and S-Corps require similar paperwork. In addition, both are owned by shareholders, have a Board of Directors with annual meetings, and are managed by executive officers. It is also a requirement that both types of corporations pay annual fees, set up bylaws, and issue stock. Basically, an S-Corporation is the legal equivalent of a regular C-Corporation. Both have the same rights. They just pays taxes differently.

But why opt for an S-Corp? What are the benefits of setting up your state of Utah business as an S-Corp?

The main difference between a C and S-Corporation is that an S-Corp is not treated as a disregarded entity. It is a pass-through tax entity. While a C-Corp’s tax attributes are determined at the entity level, an S-Corp determines its own income, deductions, credits, etc. It spreads out the tax attributes among its owners (or to its sole owner) as part of shared ownership. Likewise, within an S-Corporation, the profits are passed on to the shareholders, who are then taxed based on their personal returns. Unlike a C-Corporation, an S-Corporation is required to file an annual information tax return. A few other differences are that S-Corps must have no more than 100 shareholders (all individuals, not corporations), have only one class of stock, and be owned by U.S. citizens or resident aliens.

There are advantages to establishing an S-Corp in Utah. Registering as an S-Corporation offers you:

  • The ability to operate as a corporation even if the owner leaves the company or passes away.
  • Pass-through taxation, as owners report their share of the profits and losses on their individual tax returns.
  • A way out of being taxed twice, the way you would be in a C-Corporation. There is no double taxation occurring--once as income and again as dividend income. You save more money!
  • The opportunity to issue shares of stock to increase the value of your business.
  • A deduction of 20% of all S-Corp income on your personal tax return, which can significantly reduce your tax burden.
  • The ability to write off the S-Corp’s losses on shareholders’ individual tax returns.
  • Annual tax filing requirements, unlike C-Corps which must file every quarter.
  • Corporate status, which means shareholders, directors, and officers are protected from sharing liability as long as there is no evidence of fraud or other misdeeds

But there are a few disadvantages to starting an S-Corp. One of those is the fact that, unlike a C-Corp, there are restrictions on ownership if you start a Utah S-Corp. S-Corporations can only be owned by United States citizens or resident aliens. Additionally, an S-Corp permits only 100 shareholders, while for a C-Corp, there is no limit. But overall, the benefits far outweigh the setbacks, and an S-Corporation is an excellent choice for many entrepreneurs looking to start a business in Utah.

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Learn the Benefits of an S-Corp

Educating yourself about the different types of corporations can help you assess what is the right business structure for you. It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Decide on a Registered Agent

Just like the Utah LLC formation process, an S-Corp will also need to figure out who the Registered Agent for the corporation should be. The State of Utah requires every corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately. The Registered Agent will also act as the contact point between the state and the corporation. Once you assign someone as your Registered Agent, they can receive official correspondence and documents on behalf of your business. 

A Registered Agent can be either an individual who is a resident of Utah or a business entity that is authorized to conduct business in the state (but not your own business). This can be you or someone else within your company, but keep in mind that this person will be through whom the state has contact with your business. This agent will receive legal documents (known as “Service of Process”) that pertain to your business. Your Registered Agent’s information would go on your most important corporation forms.

Generally speaking, a Registered Agent in Utah must meet the following requirements:
  • Possess a physical street address located in Utah (no P.O. Box address).
  • Be available during regular business hours, typically Monday through Friday, 9 am to 5 pm.

Although the most comfortable option for a Utah Registered Agent would be to name yourself, a friend, or a family member, know that this information will be public record. Not only will the information be searchable on the Utah state website, it can also be republished on other sites as well. If you work from home and would much rather keep your home address private, this might not be the best choice. An alternative you can look into is hiring a Utah Commercial Registered Agent Service. We also offer a Registered Agent Service for a small charge that you can include as an add-on to your shopping cart.

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Decide on a Registered Agent

Just like the Utah LLC formation process, an S-Corp will also need to figure out who the Registered Agent for the corporation should be.

Obtain an Employer
Identification Number

Next, your Utah S-corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Fortunately, you do not have to waste time dealing with the IRS on your own. Going through the IRS directly to get your EIN can be complicated, confusing, and frustrating. GovDocFiling alleviates the angst and aggravation of filing government documents, including apply for an EIN, or Tax ID number. Plus, GovDocFiling has one low price for same-day processing and delivery of your EIN (other Tax ID filing services charge more than $300 for same-day service!). Easily apply for your EIN/Tax ID online here. In addition, if you have any questions about obtaining an EIN, we offer 24/7 email and phone support to help you through the process. Emails are answered quickly at info@govdocfiling.com.

If you know your S-Corp will have employees, you also know that you will have to pay them. Plus, you will need to figure out the amount you should deduct from their wages for tax purposes. Employees will need to fill out a W-4 Form, and you will need to give them pay stubs with their tax information. Before this all gets overwhelming, keep in mind that we offer Payroll, Tax and HR compliance solutions with our partner, ADP. We make it easy to pay your employees, track time, and file taxes effortlessly. Plus, you and your employees can view and update payroll information via an app-accessible anywhere, anytime, backed by 24/7 live customer service support.

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Obtain an Employer Identification Number

Next, your Utah S-corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Submit Your Articles
of Incorporation

To create an S-Corp in Utah, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of Utah. It establishes the basic elements of the corporation, such as the name and address of the corporation, the number and classes of stock, and certain indemnification provisions. Prior to filing, the Articles of Incorporation must be signed by each incorporator in order to authenticate it. The document can be repealed or amended with the approval of the Board of Directors.

If filing on your own, there are usually non-refundable fees that you have to pay with check or money order, additional fees for hand-delivery of forms, and long wait times whether in person or by mail--especially if you’re filing for an S-Corp during peak season. GovDocFiling can speed up the process for you. We offer an easy online application, expedited pricing, and a free business start-up guide and resources with all filings. You can apply here today.

Once your completed Utah Articles of Incorporation form is accepted, congratulations! Your company now exists as a recognized legal entity that is authorized to conduct business within the State of Utah.

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Submit Your Articles of Incorporation

To create an S-Corp in Utah, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of Utah.

Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your UT S-Corp. Basically, bylaws are rules of operation that create the company’s structure, ensuring that employees, shareholders, and executives are in the loop about how the business will be run.

Key points are covered in the corporate bylaws document, such as when annual meetings will be held, the size of your Board of Directors, and how this form will be amended if need be. In addition, member duties are explained and solutions to common disputes between parties are offered. Voting rights and salaries are discussed, and “what if” scenarios are presented. Having bylaws allows you to set up a structure that works for your business’s unique needs instead of adhering to default regulations within the state.

While bylaws are required in most states, they are not required in Utah. It is important to establish a set of bylaws that ensure your business runs smoothly. Filling out and filing this document prior to starting an S-Corporation in Utah provides protection for your business.

You can use this corporate bylaws generator to get a sense of what goes into a typical set of bylaws. To ensure it is done correctly, you can have a lawyer look over your bylaws prior to submission to ensure all necessary rules and scenarios are covered. Get legal advice from our partner Rocket Lawyer.

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Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your UT S-Corp.

Elect a Board of Directors

Utah law requires three directors, unless there are fewer than three shareholders. The Board of Directors, while they are not involved in the daily tasks of running a business, represent or govern the corporation. Their duties include handling finances and fulfilling legal requirements, as well as determining the mission of the company.

People who do not work for your company can be a part of your Board of Directors. In fact, many businesses turn to lawyers or other business owners to fill in a spot on their Board of Directors. That way, they receive outside expertise from them, plus they may come with their own additional business contacts.

These board members must adhere to something called “the duty of loyalty,” which means that directors and officers of an S-Corporation can only make decisions without any personal economic conflict. The duty of loyalty is breached if something like a self-interested transaction occurs or a business opportunity is stolen. Plus, there is also the “duty of care” to consider. Members of the Board of Directors must make decisions that are in the best interests of the corporation at all times. For example, making a decision that causes serious losses for the shareholders would mean they are in violation of their duty of care--and they can be sued for this.

Your board members will have to hold meetings to make important decisions, such as issuing shares or amending something in the Articles of Incorporation. The Board of Directors typically receives equal voting rights (some states, like Delaware, are an exception) when making these decisions. During the first meeting of the S-Corporation's Board of Directors, directors can appoint officers, decide on bylaws, select a corporate bank, and more. All subsequent meetings must be held annually, though, of course, if more are needed, more can be held.

Minutes of the meeting, which is the recorded documentation of what was discussed or what happened during a meeting, must be recorded to exhibit transparency in business operations, but they do not need to be filed with the state. Instead, these should be kept with your other corporate records, such as Articles of Incorporation and bylaws. These documents should be saved for at least seven years in order to protect your company.

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Elect a Board of Directors

First, familiarize yourself with the roles within an S-Corporation. There are three groups:

  • Shareholders
  • Board of Directors
  • Officers

Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything--if there are multiple shareholders and directors. If a corporation has only one shareholder or director, the decision-making, of course, falls on that person without the need for a group meeting. Officers, on the other hand, do not operate in groups. An officer holding the position of president, chief executive officer, or treasurer, for example, is an agent of the corporation and has the authority to act on behalf of the corporation on his or her own. Within smaller S-Corps, directors are sometimes also officers and shareholders. In that case, even though the same person is serving in multiple roles, each role has very different responsibilities and is treated as such.

Shareholders are the owners of the corporation, and they elect the Board of Directors. The directors, in unison, oversee and direct corporation affairs and make business decisions. They employ officers who carry out the Board of Directors’ decisions. Officers are responsible for the day-to-day operations of the company. An officer can be terminated by the Board of Directors at any time. Utah requirements state that there should be as many officers as stated in the bylaws. One person may hold multiple offices. If there are multiple officers, one officer is responsible for maintaining all corporate records.

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Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything--if there are multiple shareholders and directors.

Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt. Unlike taking out a business loan, you do not pay interest that eats at your profits each month. The value of your business assets can be assessed by taking a look at what amount of your business assets are owned by shareholders vs. lenders. Corporations that have a higher proportion of the company owned by lenders makes an investment in the business appear riskier. If shareholders do invest in your business and purchase stock, keep in mind that if your business fails, you would have to pay back your loans and shareholders.

While there are many advantages to issuing stock, keep in mind that shareholders have an ownership stake in the company. This means that they have certain rights, such as the ability to participate in voting and the assurance that they will be collecting dividends. Profits will be shared and decisions will have to be made in unison. The more stock you issue to shareholders, the smaller your ownership in the business (and the less of a say you have in business major business decisions). On the plus side, when your business grows, you can buy out the other shareholders and get your ownership back.

Issuing stock is not a requirement for S-Corporations, but a privilege that you can make use of if you choose. Doing so can help you fund your business if you are growing and have large, expensive projects planned in the near future. In that case, you can decide how much capital you need and figure out how many shares you’d like to issue and at what price per share. You will already have a number for how many shares you have to offer (that was decided when you filed your Articles of Incorporation). To properly assess the accurate value of each share, determine your company’s net worth first. This will help you figure out what percentage of ownership you believe each share is worth.

Typically, appointed Board of Directors can issue stock whenever and to whomever, as long as the recipient has a brokerage account and is over 18 years old. But within an S-Corp, there are a few more limitations that a C-Corp does not have. While C-Corporations can be owned by any individual or legal entity--foreign or domestic--S-Corporations can only be owned by United States citizens or resident aliens. On top of that, an S-Corp does not allow an unlimited number of shareholders. It maxes out at 100. Also, S-Corps are not permitted to be owned by a C-Corp, another S-Corp, an LLC, a partnership, or many trusts. Lastly, unlike in a C-Corp where shareholders have the option between different stock classes (common, preferred, income, value, growth), an S-Corp only permits one stock class (common).

Another thing that can limit you here is if you’ve chosen to classify your S-Corp as a private corporation. This is typically a smaller corporation where the stock isn't offered to the public. A publiC-Corporation is authorized to sell their stock to the public, while a private company can’t trade its share on public stock exchanges. But a private corporation is not always small. Many big companies are privately held--such as Dell, Koch Industries, Deloitte, and Cargill. It can be harder for private corporations to raise funds, but it can be important in order to maintain family ownership.

Whoever your corporation may sell stock to, it’s important to have a shareholder agreement for protection. This would explain the shareholder’s rights and voting power within the S-Corporation. You will want to decide and let you shareholders know what kind of say they have in the organization or management of the company when they are issued stock. Like most states, Utah requires an annual shareholder meeting.

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Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt.

Familiarize Yourself with the
State’s Taxes and Licenses

Income from pass-through entities, such as a Utah Limited Liability Company and Utah S-Corp, “passes through” the business to the owners, who are required to report this information on their personal tax returns. In that case, each individual S-Corp member would then have to pay taxes on his or her share of the S-Corp’s income. Utah’s income tax is a flat rate of 4.95%. You see more details here.

Plus, there are other various taxes. For example, employers owe payroll tax on employees wages. Plus, Utah has a property tax rate, a sales tax, and others. More tax information for Utah businesses can be found on the Utah State Tax Commision website.

In addition, there may be extra fees for certain insurances, permits, and licenses, depending on the state’s laws and the type of business you own. For example, you may need worker’s compensation, unemployment insurance, building permits, etc. Find out the requirements for S-Corps in the state you plan to run your business in. Permits and licences depending on profession can be on the Utah Government website Keep in mind that different cities or counties may require certain permits and licenses that other regions do not. Contact your city or county to see if there are any insurances, permits, or licenses you might need to obtain before you begin operating your business.

The main benefit of having a UT S-Corp instead of a Utah LLC is that your business saves money on self-employment taxes. The owners of an S-Corp do not pay self employment taxes on salaries they are paid by the corporation.

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Familiarize Yourself with the State’s Taxes and Licenses

Income from pass-through entities, such as a Utah Limited Liability Company and Utah S-Corp, “passes through” the business to the owners, who are required to report this information on their personal tax returns. In that case, each individual S-Corp member would then have to pay taxes on his or her share of the S-Corp’s income.

File an Annual Renewal

Most states require that all S-Corp owners file a report that updates all the information that the State has on file. This report is usually called an Annual Report, but in Utah, it is called an Annual Renewal. Also, Utah does not have a Secretary of State office. Instead, various state agencies and offices take care of any Utah government needs. More information on those agencies and offices can be found here.

Annual Renewals are due every year by the end of the month of initial registration. You can start filing 60 days prior to that date. When filing your Annual Renewal, you must include a filing fee of $20. Lates fees are an additional $25. Utah Annual Renewal filing is available online or via printing and mailing the report. Instructions for both methods can be found on the Utah Government website. Filing an Annual Renewal is necessary for maintaining an active status after starting a corporation in Utah. Not filing the report or paying the fee will result in being presented a Utah corporation dissolution form, after which the state will dissolve your business. The Utah Department of Corporations has more information on Annual Renewals.

Annual Renewals can be rather complex–requiring the deciphering of gross receipts, dividends, interest, losses, and all Utah corporation fees–and you should seek the help of an accountant to ensure that it is filled out properly Our partner, Bench, will provide you with a team of accountants to help you with your franchise tax reports, as well as general bookkeeping services with monthly financial statements and intuitive software to monitor your business profits and expenses.

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File an Annual Renewal

Most states require that all S-Corp owners file a report that updates all the information that the State has on file. This report is usually called an Annual Report, but in Utah, it is called an Annual Renewal.

Raise Funds for Your S-Corp

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business. Some of the most commonly-used options for obtaining funding for your S-Corp are:

  • Personal savings and assets
  • Informal loans from family and friends
  • Peer-to-peer lending sites or crowdfunding
  • Conventional bank loan
  • Short-term credit card loans
  • Government-sponsored grants/loan programs
  • Issuing stock to shareholders
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Personal Saving/Assets

Use your own savings, liquidate your assets, refinance your home, borrow your Roth IRA, etc.

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Informal Loans From Family/Friends

Ask friends or family members if they would be willing to invest in your business.

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Peer-to-Peer Landing Sites

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

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Conventional Bank Loan

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

Many new S-Corporation owners begin with their savings to fund their new business venture. If your savings are not enough, you may need to look into liquidating your personal assets or use them as collateral for loans. Can you sell your property or refinance your home? Do you have a retirement account such as a Traditional or Roth IRA? Usually, you can withdraw contributions you made to your IRA anytime, tax- and penalty-free, but that is not always the case. Find out what kind of fees your particular retirement plan will hit you with before using your IRA to fund your business.

Next, look into whether you know someone who shares your passion for your business and has the ability to contribute financially to your dream. These personal connections may want to support your startup idea. Although accepting an informal loan from a close friend or relative may feel safe, you should still protect yourself in case your relationship with the friend or family member goes sour. Have an official contract drawn up that all parties agree to. You can choose to have it notarized and have witnesses present for extra protection.

If you prefer not to borrow from friends and family, you can turn to a peer-to-peer (P2P) or social lending website. A P2P site is a place where investors seek out alternative opportunities to invest outside of stocks and bonds. You can apply for a loan and investors can decide whether or not they wish to fund your proposed business through interest-based loans. You can also look into crowdfunding, which is a way for small businesses or startups to raise money online through donations. These options typically require the ability to promote your business well, ensure complete transparency of where the funds go, and sometimes, the possibility of giving up ownership of a piece of your business. Make sure you look into all of the specifics.

You might be hoping to rely on a conventional loan from a bank, credit union or other lending institution for your main source of funds. In this case, you would need a formal business plan to present during your loan application process. If approved, you would be required to sign a legal contract, or a Promissory Note, outlining your obligations to the lender (which would primarily entail regular payments until the loan is paid off). If you are a first-time business owner, it is likely that you may be rejected initially. In that case, you can improve your application and reapply, or look into alternative sources of funding such as short-term financing via credit cards.

Using a credit card as a means of obtaining a fast and easy business loan would grant you use of immediate funds without the hassle and paperwork of loan applications or business plans. This is the best option for a brand new business, and we work with Nav to give our customers access to the credit they need. Visit our financing page and fill out the form for more information.

There are many credit cards that have low or no annual fees, low introductory interest rates, and other rewards depending on your spending. But be careful: make sure you pay back your credit card before the promotional low interest rate expires and skyrockets, or prior to having to pay large annual fees. And don’t make large purchases that can take years to pay back. For example, getting an equipment loan to purchase a piece of equipment is smarter than putting it on a credit card. Credit cards can be a good temporary solution if your business plan will allow you to pay back the debt quickly.

Another option at your disposal is a government-sponsored grant or loan program. Traditional lenders can turn to federal, state, or local governments to finance their business if such a grant or program is available. Typically, these programs consider sponsoring specific type of businesses or certain business owners, so be sure to research what government-sponsored loan your particular business or you might be eligible for.


Lastly, you can invite people to your team. S-Corporations may have a single person as the company's owner, or an unlimited number of shareholders participating in the ownership of the business. If you could see your businesses strategy succeeding with a partner or multiple partners, pool together your financial resources with another member to support your startup. An advantage to this funding option is your partner(s) may come with their own social network of business contacts and possibly even their own potential investors. To protect yourself, you can adjust your bylaws and ensure that you are still the primary owner of your Utah S-Corporation.

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Raise Funds for Your S-Corp

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business.

Create a Business Website

Creating a website for your Utah business is not a requirement but it is recommended to any business owner operating in the modern world. An online presence is important to have and maintain in order to ensure that your customers trust your company and know they will receive good customer service. Having a website gives your business legitimacy; your customers will visit your website and see that you are a real company with an actual website where they can read about the company’s origin and products/services and access contact information. Being able to read up on a company on their website leads to trust between a consumer and an organization. Also, dependable customer service is often offered through a website. By offering an email address, a contact form, and/or live chat with a representative on your website, you are making it easy for a customer to get connected with someone knowledgeable about the product/service. That allows a customer to know that there is a real person who cares about their satisfaction within the company that they are doing business with.

Start S-Corp formation

If the website is outdated or there is no website, a consumer may feel that you are not a legitimate business but a scam with no licenses to back up your business’ operations. You can avoid losing customers due to not having a professional website by ensuring that you have one. We work with GoNorth Websites to provide new businesses with high quality, cost-effective websites. Find out more about our custom designed, written, and developed websites, plus optional internet marketing add-ons that help you grow your business.

But websites needs maintenance too. You can’t simply have one created and never update it throughout the years. Policies and terms change, companies grow, products/services improve, and all of that (and more) can be reflected on the website. This keeps your customers up-to-date and offers a personal touch that is valued by any consumer.

In addition, you can look into having a blog or utilizing social media as another means of keeping your customers in-the-know and offering them a way to interact with your company. An online and/or social media presence can also lead to responsive customers who can offer you feedback on how you’re doing—plus, it’ll help get your company’s name out there.

If this all sounds like more than you’d like to deal with on your own, know that you can hire someone to maintain your website and social media presence for you—just like you can hire customer representatives to handle all correspondence. You can employ a web agency to monitor your website and/or a social media marketing agency to manage your social media campaign. A social media campaign is a coordinated marketing plan that can assist you with your business goals, which translates into extra advertising for your new business. Marketing your company can help you have a more profitable business and can aid you with paying back your business loans quicker—something any business owner aims for. Regardless of industry, all businesses should consider having a website as part of the first steps of starting a business.

The Benefits of Having an Online Presence
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You will show your customers that you are a legitimate business and build trust.
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Your company will be easy to correspond with and you can provide good, responsive customer service.
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Your customers will be kept up-to-date on all exciting news related to your business.


If you’ve decided that you want to have a website for your business, keep a few things in mind. When coming up with a website name, make sure that the domain contains your business name and is easy to type and remember for future visits. If you come up with a great web domain that you’d like to use for your business but you don’t plan to create a business website today, you may want to buy the URL to prevent others from acquiring it.

While brainstorming website URLs for your website, you’re going to either realize that you already know what your business is going to be named or that you have no idea what or how to name your business. Here are a few Utah corp name tips:

  • Follow S-Corp naming guidelines. A corporation’s name usually has to include words, like Corporation, Incorporated, Company, or Limited; or abbreviations, like Corp., Inc., Co., or Ltd. It’s also important not to use any words or phrases that will make it easy for someone to mistake your company for a federal agency; think “State Department.”
  • Find a unique name. If you’re getting an S-Corp in Utah you will need an original name that is not in use by another corporation. To check if a name has already been taken, you can search the Business Name Availability Database.
  • Make sure it is available as a web domain. This way, you can find out if another company outside of Utah has a corporation with the same name. In that case, think of something more original.
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Create a Business Website

Creating a website for your business is not a requirement but it is recommended to any business owner operating in the modern world.

Begin Operating Your Business

Once you become an official Utah corporation, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings. This is mandatory if you don’t want your new business to run into any issues. If you’d rather not do these tasks yourself, you can sign up for a service that will automatically send you alerts ahead of crucial state and federal filing deadlines. Likewise, you can hire an accountant, a tax professional, and/or an attorney to ensure you are not making errors when keeping records, filling out paperwork, and making payments.

Next, make sure you’ve obtained all necessary permits, licenses, and insurances that your UT corp might need—and you’re good to go! Begin operating your Utah business with peace of mind, knowing that you are protected by an S-Corp in case anything unforeseeable affects your new business venture.

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Begin Operating Your Business

Once you become an official Utah corporation, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings.


Texas S-Corp

Learn the Benefits of an S-Corp

When you decide to start a business, there are a number of business entities to choose from. Each has its own advantages and disadvantages, which we will introduce to you here. Prospective business owners should consult with professionals, such as a business attorney and accountants, before making the final decision. But educating yourself about the different types of corporations can help you assess what is the right business structure for you beforehand.

But first, are you ready to incorporate? It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Typically, “material size” means a business with revenue above $100,000. Once you know you’re ready, you have the option between choosing to classify your business as a C-Corporation or an S-Corporation. While S-Corps used to be the way to go for small businesses (it’s even been nicknamed the “Small BusinesS-Corporation”), thanks to the 2017 Tax Cuts and Jobs Act, C-Corps may now offer lower corporate tax rates to smaller business. Now, S-Corps are sometimes advisable for larger businesses. But keep in mind that C-Corps give you more options to expand and raise money, which can be very beneficial to a larger business. You may want to discuss the differences with a financial advisor or lawyer who can help break down all of the costs to help you assess what will work best for you.

Whether you choose to structure your business entity as a C or S-Corporation will determine how much you’ll pay in taxes, the ways you’re permitted to raise money, and the ease with which you can expand as your business grows. The standard and most common type of corporation is a C-Corporation. In fact, a C-Corp is the default type of corporation, and all S-Corps begin as a C-Corp or LLC. When you initially incorporate, your company will automatically become a standard C-Corp, and only after you file multiple forms can you transition to an S-Corp for federal tax purposes.

Why is an S-Corp a good idea for an e-commerce Business?

If there is an issue with a product, an S-Corp protects you. Compensation can only be taken from the S-Corp’s assets, not your personal assets.

Start Your S-Corp Now
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How do you know which type of corporation you want to register your business as when they are both so similar? Both types of corporations offer owners protection from individual liability, so shareholders (and directors, officers, and employees) are typically not personally responsible for business debts. C-Corps and S-Corps require similar paperwork. In addition, both are owned by shareholders, have a Board of Directors with annual meetings, and are managed by executive officers. It is also a requirement that both types of corporations pay annual fees, set up bylaws, and issue stock. Basically, an S-Corporation is the legal equivalent of a regular C-Corporation. Both have the same rights. They just pays taxes differently.

But why opt for an S-Corp? What are the benefits of setting up your Texas business as an S-Corp?

The main difference between a C and S-Corporation is that an S-Corp is not treated as a disregarded entity. It is a pass-through tax entity. While a C-Corp’s tax attributes are determined at the entity level, an S-Corp determines its own income, deductions, credits, etc. It spreads out the tax attributes among its owners (or to its sole owner) as part of shared ownership. Likewise, within an S-Corporation, the profits are passed on to the shareholders, who are then taxed based on their personal returns. Unlike a C-Corporation, an S-Corporation is required to file an annual information tax return. A few other differences are that S-Corps must have no more than 100 shareholders (all individuals, not corporations), have only one class of stock, and be owned by U.S. citizens or resident aliens.

There are advantages to setting up your business as a Texas S-Corp. Registering as an S-Corporation offers you:

  • The ability to operate as a corporation even if the owner leaves the company or passes away.
  • Pass-through taxation, as owners report their share of the profits and losses on their individual tax returns.
  • A way out of being taxed twice, the way you would be in a C-Corporation. There is no double taxation occurring--once as income and again as dividend income. You save more money!
  • The opportunity to issue shares of stock to increase the value of your business.
  • A deduction of 20% of all S-Corp income on your personal tax return, which can significantly reduce your tax burden.
  • The ability to write off the S-Corp’s losses on shareholders’ individual tax returns.
  • Annual tax filing requirements, unlike C-Corps which must file every quarter.
  • Corporate status, which means shareholders, directors, and officers are protected from sharing liability as long as there is no evidence of fraud or other misdeeds

But there are a few disadvantages to starting an S-Corp. One of those is the fact that, unlike a C-Corp, there are restrictions on ownership if you create a Texas S-Corp. S-Corporations can only be owned by United States citizens or resident aliens. Additionally, an S-Corp permits only 100 shareholders, while for a C-Corp, there is no limit. But overall, the benefits far outweigh the setbacks, and an S-Corporation is an excellent choice for many entrepreneurs looking to start a business in Texas.

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Learn the Benefits of an S-Corp

Educating yourself about the different types of corporations can help you assess what is the right business structure for you. It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Decide on a Registered Agent

Next, figure out who the Registered Agent for your S-Corp should be. The State of Texas requires every S-Corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately. The Registered Agent will also act as the contact point between your S-Corp and the Secretary of State’s office. Once you assign someone as your Registered Agent, they can receive official correspondence and documents on behalf of your business.

A Registered Agent can be either an individual who is a resident of Texas or a business entity that is authorized to conduct business in the state (but not your own business). This can be you or someone else within your company, but keep in mind that this person will be through whom the state has contact with your business. This agent will receive legal documents (known as “Service of Process”) that pertain to your business. Your Registered Agent’s information would go on your most important corporation forms.

Generally speaking, a Registered Agent in Texas must meet the following requirements:
  • Possess a physical street address located in Texas (no P.O. Box address).
  • Be available during regular business hours, typically Monday through Friday, 9 am to 5 pm.

Although the most comfortable option for a Texas Registered Agent would be to name yourself, a friend, or a family member, know that this information will be public record. Not only will the information be searchable on the Texas state website, it can also be republished on other sites as well. If you work from home and would much rather keep your home address private, this might not be the best choice. An alternative you can look into is hiring a Texas Commercial Registered Agent Service. We also offer a Registered Agent Service for a small charge that you can include as an add-on to your shopping cart.

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Decide on a Registered Agent

Next, figure out who the Registered Agent for your S-Corp should be. The State of Texas requires every S-Corporation in the state to have one.

Submit Your Certificate of Formation

To create an S-Corp in Texas, you will also need to register your business by filling out and submitting the Certificate of Formation--usually called the Articles of Incorporation in other states. The Certificate of Formation is a form that should be filed (and maintained) with the state of Texas. It establishes the basic elements of the corporation, such as the name and address of the corporation, the number and classes of stock, and certain indemnification provisions. Prior to filing, the Texas Certificate of Formation must be signed by each incorporator in order to authenticate it. The document can be repealed or amended with the approval of the Board of Directors.

If filing on your own, there are usually non-refundable fees that you have to pay with check or money order, additional fees for hand-delivery of forms, and long wait times whether in person or by mail--especially if you’re filing for an S-Corp during peak season. GovDocFiling can speed up the process for you. We offer an easy online application, expedited pricing, and a free business start-up guide and resources with all filings. You can apply here today.

Once your completed Texas Articles of Incorporation form is accepted, congratulations! Your company now exists as a recognized legal entity that is authorized to conduct business within the State of Texas.

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Submit Your Certificate of Formation

To create an S-Corp in Texas, you will also need to register your business by filling out and submitting the Certificate of Formation - usually called the Articles of Incorporation in other states. The Certificate of Formation is a form that should be filed (and maintained) with the state of Texas.

Obtain an Employer
Identification Number

Next, your S-Corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Fortunately, you do not have to waste time dealing with the IRS on your own. Going through the IRS directly to get your EIN can be complicated, confusing, and frustrating. GovDocFiling alleviates the angst and aggravation of filing government documents, including apply for an EIN, or Tax ID number. Plus, GovDocFiling has one low price for same-day processing and delivery of your EIN (other Tax ID filing services charge more than $300 for same-day service!). Easily apply for your EIN/Tax ID online here. In addition, if you have any questions about obtaining an EIN, we offer 24/7 email and phone support to help you through the process. Emails are answered quickly at info@govdocfiling.com.

If you know your S-Corp will have employees, you also know that you will have to pay them. Plus, you will need to figure out the amount you should deduct from their wages for tax purposes. Employees will need to fill out a W-4 Form, and you will need to give them pay stubs with their tax information. Before this all gets overwhelming, keep in mind that we offer Payroll, Tax and HR compliance solutions with our partner, ADP. We make it easy to pay your employees, track time, and file taxes effortlessly. Plus, you and your employees can view and update payroll information via an app-accessible anywhere, anytime, backed by 24/7 live customer service support.

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Obtain an Employer Identification Number

Next, your S-Corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your S-Corporation. Basically, bylaws are rules of operation that create the company’s structure, ensuring that employees, shareholders, and executives are in the loop about how the business will be run.

Key points are covered in the corporate bylaws document, such as when annual meetings will be held, the size of your Board of Directors, and how this form will be amended if need be. In addition, member duties are explained and solutions to common disputes between parties are offered. Voting rights and salaries are discussed, and “what if” scenarios are presented. Having bylaws allows you to set up a structure that works for your business’s unique needs instead of adhering to default regulations within the state.

While bylaws are not required in some states, they are required in Texas. It is important to establish a set of bylaws that ensure your business runs smoothly. Filling out and filing this document prior to starting an S-Corporation in Texas provides protection for your business.

You can use this corporate bylaws generator to get a sense of what goes into a typical set of bylaws. To ensure it is done correctly, you can have a lawyer look over your bylaws prior to submission to ensure all necessary rules and scenarios are covered. Get legal advice from our partner Rocket Lawyer.

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Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your UT S-Corp.

Elect a Board of Directors

Texas requirements state that there should be one or more director(s). The Board of Directors, while they are not involved in the daily tasks of running a business, represent or govern the corporation. Their duties include handling finances and fulfilling legal requirements, as well as determining the mission of the company.

People who do not work for your company can be a part of your Board of Directors. In fact, many businesses turn to lawyers or other business owners to fill in a spot on their Board of Directors. That way, they receive outside expertise from them, plus they may come with their own additional business contacts.

These board members must adhere to something called “the duty of loyalty,” which means that directors and officers of an S-Corporation can only make decisions without any personal economic conflict. The duty of loyalty is breached if something like a self-interested transaction occurs or a business opportunity is stolen. Plus, there is also the “duty of care” to consider. Members of the Board of Directors must make decisions that are in the best interests of the corporation at all times. For example, making a decision that causes serious losses for the shareholders would mean they are in violation of their duty of care--and they can be sued for this.

Your board members will have to hold meetings to make important decisions, such as issuing shares or amending something in the Articles of Incorporation. The Board of Directors typically receives equal voting rights (some states, like Delaware, are an exception) when making these decisions. During the first meeting of the S-Corporation's Board of Directors, directors can appoint officers, decide on bylaws, select a corporate bank, and more. All subsequent meetings must be held annually, though, of course, if more are needed, more can be held.

Minutes of the meeting, which is the recorded documentation of what was discussed or what happened during a meeting, must be recorded to exhibit transparency in business operations, but they do not need to be filed with the state. Instead, these should be kept with your other corporate records, such as Certificate of Formation and bylaws. These documents should be saved for at least seven years in order to protect your company.

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Elect a Board of Directors

First, familiarize yourself with the roles within an S-Corporation. There are three groups:

  • Shareholders
  • Board of Directors
  • Officers

Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything--if there are multiple shareholders and directors. If a corporation has only one shareholder or director, the decision-making, of course, falls on that person without the need for a group meeting. Officers, on the other hand, do not operate in groups. An officer holding the position of president, chief executive officer, or treasurer, for example, is an agent of the corporation and has the authority to act on behalf of the corporation on his or her own. Within smaller S-Corps, directors are sometimes also officers and shareholders. In that case, even though the same person is serving in multiple roles, each role has very different responsibilities and is treated as such.

Shareholders are the owners of the corporation, and they elect the Board of Directors. The directors, in unison, oversee and direct corporation affairs and make business decisions. They employ officers who carry out the Board of Directors’ decisions. Officers are responsible for the day-to-day operations of the company. An officer can be terminated by the Board of Directors at any time.

Texas requirements state that there should be as many officers as stated in the bylaws.

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Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything - if there are multiple shareholders and directors.

Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt. Unlike taking out a business loan, you do not pay interest that eats at your profits each month. The value of your business assets can be assessed by taking a look at what amount of your business assets are owned by shareholders vs. lenders. Corporations that have a higher proportion of the company owned by lenders makes an investment in the business appear riskier. If shareholders do invest in your business and purchase stock, keep in mind that if your business fails, you would have to pay back your loans and shareholders.

While there are many advantages to issuing stock, keep in mind that shareholders have an ownership stake in the company. This means that they have certain rights, such as the ability to participate in voting and the assurance that they will be collecting dividends. Profits will be shared and decisions will have to be made in unison. The more stock you issue to shareholders, the smaller your ownership in the business (and the less of a say you have in business major business decisions). On the plus side, when your business grows, you can buy out the other shareholders and get your ownership back.

Issuing stock is not a requirement for S-Corporations, but a privilege that you can make use of if you choose. Doing so can help you fund your business if you are growing and have large, expensive projects planned in the near future. In that case, you can decide how much capital you need and figure out how many shares you’d like to issue and at what price per share. You will already have a number for how many shares you have to offer (that was decided when you filed your Articles of Incorporation). To properly assess the accurate value of each share, determine your company’s net worth first. This will help you figure out what percentage of ownership you believe each share is worth.

Typically, appointed Board of Directors can issue stock whenever and to whomever, as long as the recipient has a brokerage account and is over 18 years old. But within an S-Corp, there are a few more limitations that a C-Corp does not have. While C-Corporations can be owned by any individual or legal entity--foreign or domestic--S-Corporations can only be owned by United States citizens or resident aliens. On top of that, an S-Corp does not allow an unlimited number of shareholders. It maxes out at 100. Also, S-Corps are not permitted to be owned by a C-Corp, another S-Corp, an LLC, a partnership, or many trusts. Lastly, unlike in a C-Corp where shareholders have the option between different stock classes (common, preferred, income, value, growth), an S-Corp only permits one stock class (common).

Another thing that can limit you here is if you’ve chosen to classify your S-Corp as a private corporation. This is typically a smaller corporation where the stock isn't offered to the public. A publiC-Corporation is authorized to sell their stock to the public, while a private company can’t trade its share on public stock exchanges. But a private corporation is not always small. Many big companies are privately held--such as Dell, Koch Industries, Deloitte, and Cargill. It can be harder for private corporations to raise funds, but it can be important in order to maintain family ownership.

Whoever your corporation may sell stock to, it’s important to have a shareholder agreement for protection. This would explain the shareholder’s rights and voting power within the S-Corporation. You will want to decide and let you shareholders know what kind of say they have in the organization or management of the company when they are issued stock. An annual shareholder meeting is required in Texas.

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Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt.

Familiarize Yourself with the
State’s Taxes and Licenses

Both S and C-Corporations established in Texas need to pay taxes. Good news for business owners in Texas: the state does not have a corporate income tax. Instead, Texas has a franchise tax that is a privilege tax imposed on each S and C-Corporation in Texas. This means that, while Texas does recognize the federal S election for corporations, S-Corporations are still subject to the state’s franchise tax. However, shareholders do not owe state tax on whatever portion of the corporation’s net income they receive. Franchise tax is based on a taxable entity’s margin. For more information, see the Franchise Tax Overview.

In addition, there may be extra fees for certain insurances, permits, and licenses. Texas workers’ compensation laws do not make it mandatory for all employers to have occupational injury insurance coverage, but there are some exceptions, such as construction contracts for governmental entities. Plus, different cities or counties may require certain permits and licenses. Here are some of the most common licenses and permits you may need.

  • Building Permit
  • Business License
  • Health Permit
  • Occupational Permit
  • Zoning Permit

You can find a list of most permits and licenses required in Texas here. Find out from your city or county if there are any other permits you might need to obtain before you begin operating your business.

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Familiarize Yourself with the State’s Taxes and Licenses

Both S and C-Corporations established in Texas need to pay taxes. Good news for business owners in Texas: the state does not have a corporate income tax. Instead, Texas has a franchise tax that is a privilege tax imposed on each S and C-Corporation in Texas.

File a Public Information Report

The State of Texas does not require corporations to file an annual report, like most states. Instead, Texas requires the filing of a Franchise Tax Report. More commonly, it is referred to as a Public Information Report on a corporation’s annual franchise tax. This Franchise Tax Report is submitted to the Texas Comptroller of Public Accounts(CPA) by May 15 of each year.

Good news for prospective S-Corporation owners in Texas: while some states charge over $500 every single year as a required fee that all corporation owners must pay when submitting their Reports, Texas does not require any additional fees simply for processing the Public Information Report.

The report can be rather complex–requiring the deciphering of gross receipts, dividends, interest, losses, etc.–and you should seek the help of an accountant to ensure that it is filled out properly. Our partner, Bench, will provide you with a team of accountants to help you with your franchise tax reports, as well as general bookkeeping services with monthly financial statements and intuitive software to monitor your business profits and expenses.

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File a Public Information Report

The State of Texas does not require corporations to file an annual report, like most states. Instead, Texas requires the filing of a Franchise Tax Report. More commonly, it is referred to as a Public Information Report on a corporation’s annual franchise tax.

Raise Funds for Your Corporation

You can’t start a business in Texas with zero capital. There are legal fees, TexaS-Corp document filing fees, taxes, employees to pay, as well as the costs of operating a business. Some of the most commonly-used options for obtaining funding for your S-Corp are:

  • Personal savings and assets
  • Informal loans from family and friends
  • Peer-to-peer lending sites or crowdfunding
  • Conventional bank loan
  • Short-term credit card loans
  • Government-sponsored grants/loan programs
  • Issuing stock to shareholders
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Personal Saving/Assets

Use your own savings, liquidate your assets, refinance your home, borrow your Roth IRA, etc.

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Informal Loans From Family/Friends

Ask friends or family members if they would be willing to invest in your business.

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Peer-to-Peer Landing Sites

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

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Conventional Bank Loan

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

Many new S-Corporation owners begin with their savings to fund their new business venture. If your savings are not enough, you may need to look into liquidating your personal assets or use them as collateral for loans. Can you sell your property or refinance your home? Do you have a retirement account such as a Traditional or Roth IRA? Usually, you can withdraw contributions you made to your IRA anytime, tax- and penalty-free, but that is not always the case. Find out what kind of fees your particular retirement plan will hit you with before using your IRA to fund your business.

Next, look into whether you know someone who shares your passion for your business and has the ability to contribute financially to your dream. These personal connections may want to support your startup idea. Although accepting an informal loan from a close friend or relative may feel safe, you should still protect yourself in case your relationship with the friend or family member goes sour. Have an official contract drawn up that all parties agree to. You can choose to have it notarized and have witnesses present for extra protection.

If you prefer not to borrow from friends and family, you can turn to a peer-to-peer (P2P) or social lending website. A P2P site is a place where investors seek out alternative opportunities to invest outside of stocks and bonds. You can apply for a loan and investors can decide whether or not they wish to fund your proposed business through interest-based loans. You can also look into crowdfunding, which is a way for small businesses or startups to raise money online through donations. These options typically require the ability to promote your business well, ensure complete transparency of where the funds go, and sometimes, the possibility of giving up ownership of a piece of your business. Make sure you look into all of the specifics.

You might be hoping to rely on a conventional loan from a bank, credit union or other lending institution for your main source of funds. In this case, you would need a formal business plan to present during your loan application process. If approved, you would be required to sign a legal contract, or a Promissory Note, outlining your obligations to the lender (which would primarily entail regular payments until the loan is paid off). If you are a first-time business owner, it is likely that you may be rejected initially. In that case, you can improve your application and reapply, or look into alternative sources of funding such as short-term financing via credit cards.

Using a credit card as a means of obtaining a fast and easy business loan would grant you use of immediate funds without the hassle and paperwork of loan applications or business plans. This is the best option for a brand new business, and we work with Nav to give our customers access to the credit they need. Visit our financing page and fill out the form for more information.

There are many credit cards that have low or no annual fees, low introductory interest rates, and other rewards depending on your spending. But be careful: make sure you pay back your credit card before the promotional low interest rate expires and skyrockets, or prior to having to pay large annual fees. And don’t make large purchases that can take years to pay back. For example, getting an equipment loan to purchase a piece of equipment is smarter than putting it on a credit card. Credit cards can be a good temporary solution if your business plan will allow you to pay back the debt quickly.

Another option at your disposal is a government-sponsored grant or loan program. Traditional lenders can turn to federal, state, or local governments to finance their business if such a grant or program is available. Typically, these programs consider sponsoring specific type of businesses or certain business owners, so be sure to research what government-sponsored loan your particular business or you might be eligible for.


Lastly, you can invite people to your team. S-Corporations may have a single person as the company's owner, or an unlimited number of shareholders participating in the ownership of the business. If you could see your businesses strategy succeeding with a partner or multiple partners, pool together your financial resources with another member to support your startup. An advantage to this funding option is your partner(s) may come with their own social network of business contacts and possibly even their own potential investors. To protect yourself, you can adjust your bylaws and ensure that you are still the primary owner of the S-Corp.

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Raise Funds for Your Corporation

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business.

Create a Business Website

Creating a website for your Texas S-Corp business is not a requirement but it is recommended to any business owner operating in the modern world. An online presence is important to have and maintain in order to ensure that your customers trust your company and know they will receive good customer service. Having a website gives your business legitimacy; your customers will visit your website and see that you are a real company with an actual website where they can read about the company’s origin and products/services and access contact information. Being able to read up on a company on their website leads to trust between a consumer and an organization. Also, dependable customer service is often offered through a website. By offering an email address, a contact form, and/or live chat with a representative on your website, you are making it easy for a customer to get connected with someone knowledgeable about the product/service. That allows a customer to know that there is a real person who cares about their satisfaction within the company that they are doing business with.

Start S-Corp formation

If the website is outdated or there is no website, a consumer may feel that you are not a legitimate business but a scam with no licenses to back up your business’ operations. You can avoid losing customers due to not having a professional website by ensuring that you have one. We work with GoNorth Websites to provide new businesses with high quality, cost-effective websites. Find out more about our custom designed, written, and developed websites, plus optional internet marketing add-ons that help you grow your business.

But websites needs maintenance too. You can’t simply have one created and never update it throughout the years. Policies and terms change, companies grow, products/services improve, and all of that (and more) can be reflected on the website. This keeps your customers up-to-date and offers a personal touch that is valued by any consumer.

In addition, you can look into having a blog or utilizing social media as another means of keeping your customers in-the-know and offering them a way to interact with your company. An online and/or social media presence can also lead to responsive customers who can offer you feedback on how you’re doing—plus, it’ll help get your company’s name out there.

If this all sounds like more than you’d like to deal with on your own, know that you can hire someone to maintain your website and social media presence for you—just like you can hire customer representatives to handle all correspondence. You can employ a web agency to monitor your website and/or a social media marketing agency to manage your social media campaign. A social media campaign is a coordinated marketing plan that can assist you with your business goals, which translates into extra advertising for your new business. Marketing your company can help you have a more profitable business and can aid you with paying back your business loans quicker—something any business owner aims for. Regardless of industry, all businesses should consider having a website as part of the first steps of starting a business.

The Benefits of Having an Online Presence
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You will show your customers that you are a legitimate business and build trust.
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Your company will be easy to correspond with and you can provide good, responsive customer service.
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Your customers will be kept up-to-date on all exciting news related to your business.


If you’ve decided that you want to have a website for your business, keep a few things in mind. When coming up with a website name, make sure that the domain contains your business name and is easy to type and remember for future visits. If you come up with a great web domain that you’d like to use for your business but you don’t plan to create a business website today, you may want to buy the URL to prevent others from acquiring it.

While brainstorming website URLs for your website, you’re going to either realize that you already know what your business is going to be named or that you have no idea what or how to name your business. Here are a few TexaS-Corp name tips:

  • Follow S-Corp naming guidelines. A corporation’s name usually has to include words, like Corporation, Incorporated, Company, or Limited; or abbreviations, like Corp., Inc., Co., or Ltd. It’s also important not to use any words or phrases that will make it easy for someone to mistake your company for a federal agency; think “State Department.”
  • Find a unique name. If you’re getting an S-Corp in Texas you will need an original name that is not in use by another corporation. To check if a name has already been taken, you can search the Texas Name Availability Database.
  • Make sure it is available as a web domain. This way, you can find out if another company outside of Texas has a corporation with the same name. In that case, think of something more original.
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Create a Business Website

Creating a website for your business is not a requirement but it is recommended to any business owner operating in the modern world.

Begin Operating Your Business

Once you become an official S-Corporation in the state of Texas, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings. This is mandatory if you don’t want your new business to run into any issues. If you’d rather not do these tasks yourself, you can sign up for a service that will automatically send you alerts ahead of crucial state and federal filing deadlines. Likewise, you can hire an accountant, a tax professional, and/or an attorney to ensure you are not making errors when keeping records, filling out paperwork, and making payments.

Next, make sure you’ve obtained all necessary permits, licenses, and insurances that your TX corp might need—and you’re good to go! Begin operating your Texas business with peace of mind, knowing that you are protected by an S-Corp in case anything unforeseeable affects your new business venture.

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Begin Operating Your Business

Once you become an official S-Corporation in the state of Texas, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings.


Tennessee S-Corp

Learn the Benefits of an S-Corp

When you decide to start a business, there are a number of business entities to choose from. Each has its own advantages and disadvantages, which we will introduce to you here. Prospective business owners should consult with professionals, such as a business attorney and accountants, before making the final decision. But educating yourself about the different types of corporations can help you assess what is the right business structure for you beforehand.

But first, are you ready to incorporate? It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Typically, “material size” means a business with revenue above $100,000. Once you know you’re ready, you have the option between choosing to classify your business as a C-Corporation or an S-Corporation. While S-Corps used to be the way to go for small businesses (it’s even been nicknamed the “Small BusinesS-Corporation”), thanks to the 2017 Tax Cuts and Jobs Act, C-Corps may now offer lower corporate tax rates to smaller business. Now, S-Corps are sometimes advisable for larger businesses. But keep in mind that C-Corps give you more options to expand and raise money, which can be very beneficial to a larger business. You may want to discuss the differences with a financial advisor or lawyer who can help break down all of the costs to help you assess what will work best for you.

Whether you choose to structure your business entity as a C or S-Corporation will determine how much you’ll pay in taxes, the ways you’re permitted to raise money, and the ease with which you can expand as your business grows. The standard and most common type of corporation is a C-Corporation. In fact, a C-Corp is the default type of corporation, and all S-Corps begin as a C-Corp or LLC. When you initially incorporate, your company will automatically become a standard C-Corp, and only after you file multiple forms can you transition to an S-Corp for federal tax purposes.

Why is an S-Corp a good idea for an e-commerce Business?

If there is an issue with a product, an S-Corp protects you. Compensation can only be taken from the S-Corp’s assets, not your personal assets.

Start Your S-Corp Now
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How do you know which type of corporation you want to register your business as when they are both so similar? Both types of corporations offer owners protection from individual liability, so shareholders (and directors, officers, and employees) are typically not personally responsible for business debts. C-Corps and S-Corps require similar paperwork. In addition, both are owned by shareholders, have a Board of Directors with annual meetings, and are managed by executive officers. It is also a requirement that both types of corporations pay annual fees, set up bylaws, and issue stock. Basically, an S-Corporation is the legal equivalent of a regular C-Corporation. Both have the same rights. They just pays taxes differently.

But why opt for an S-Corp? What are the benefits of setting up your state of Tennessee business as an S-Corp?

The main difference between a C and S-Corporation is that an S-Corp is not treated as a disregarded entity. It is a pass-through tax entity. While a C-Corp’s tax attributes are determined at the entity level, an S-Corp determines its own income, deductions, credits, etc. It spreads out the tax attributes among its owners (or to its sole owner) as part of shared ownership. Likewise, within an S-Corporation, the profits are passed on to the shareholders, who are then taxed based on their personal returns. Unlike a C-Corporation, an S-Corporation is required to file an annual information tax return. A few other differences are that S-Corps must have no more than 100 shareholders (all individuals, not corporations), have only one class of stock, and be owned by U.S. citizens or resident aliens.

There are advantages to establishing an S-Corp in Tennessee. Registering as an S-Corporation offers you:

  • The ability to operate as a corporation even if the owner leaves the company or passes away.
  • Pass-through taxation, as owners report their share of the profits and losses on their individual tax returns.
  • A way out of being taxed twice, the way you would be in a C-Corporation. There is no double taxation occurring--once as income and again as dividend income. You save more money!
  • The opportunity to issue shares of stock to increase the value of your business.
  • A deduction of 20% of all S-Corp income on your personal tax return, which can significantly reduce your tax burden.
  • The ability to write off the S-Corp’s losses on shareholders’ individual tax returns.
  • Annual tax filing requirements, unlike C-Corps which must file every quarter.
  • Corporate status, which means shareholders, directors, and officers are protected from sharing liability as long as there is no evidence of fraud or other misdeeds

But there are a few disadvantages to starting an S-Corp. One of those is the fact that, unlike a C-Corp, there are restrictions on ownership if you start a Tennessee S-Corp. S-Corporations can only be owned by United States citizens or resident aliens. Additionally, an S-Corp permits only 100 shareholders, while for a C-Corp, there is no limit. But overall, the benefits far outweigh the setbacks, and an S-Corporation is an excellent choice for many entrepreneurs looking to start a business in Tennessee.

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Learn the Benefits of an S-Corp

Educating yourself about the different types of corporations can help you assess what is the right business structure for you. It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Decide on a Registered Agent

Next, figure out who the Registered Agent for the corporation should be. The State of Tennessee requires every corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately. The Registered Agent will also act as the contact point between the Tennessee Secretary of State and the corporation. Once you assign someone as your Registered Agent, they can receive official correspondence and documents on behalf of your business. 

A Registered Agent can be either an individual who is a resident of Tennessee or a business entity that is authorized to conduct business in the state (but not your own business). This can be you or someone else within your company, but keep in mind that this person will be through whom the state has contact with your business. This agent will receive legal documents (known as “Service of Process”) that pertain to your business. Your Registered Agent’s information would go on your most important Tennessee Secretary of State corporation forms.

Generally speaking, a Registered Agent in Tennessee must meet the following requirements:
  • Possess a physical street address located in Tennessee (no P.O. Box address).
  • Be available during regular business hours, typically Monday through Friday, 9 am to 5 pm.

Although the most comfortable option for a Tennessee Registered Agent would be to name yourself, a friend, or a family member, know that this information will be public record. Not only will the information be searchable on the Tennessee state website, it can also be republished on other sites as well. If you work from home and would much rather keep your home address private, this might not be the best choice. An alternative you can look into is hiring a Tennessee Commercial Registered Agent Service. We also offer a Registered Agent Service for a small charge that you can include as an add-on to your shopping cart.

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Decide on a Registered Agent

Next, figure out who the Registered Agent for the corporation should be. The State of Tennessee requires every corporation in the state to have one.

Obtain an Employer
Identification Number

Next, your S-Corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Fortunately, you do not have to waste time dealing with the IRS on your own. Going through the IRS directly to get your EIN can be complicated, confusing, and frustrating. GovDocFiling alleviates the angst and aggravation of filing government documents, including apply for an EIN, or Tax ID number. Plus, GovDocFiling has one low price for same-day processing and delivery of your EIN (other Tax ID filing services charge more than $300 for same-day service!). Easily apply for your EIN/Tax ID online here. In addition, if you have any questions about obtaining an EIN, we offer 24/7 email and phone support to help you through the process. Emails are answered quickly at info@govdocfiling.com.

If you know your S-Corp will have employees, you also know that you will have to pay them. Plus, you will need to figure out the amount you should deduct from their wages for tax purposes. Employees will need to fill out a W-4 Form, and you will need to give them pay stubs with their tax information. Before this all gets overwhelming, keep in mind that we offer Payroll, Tax and HR compliance solutions with our partner, ADP. We make it easy to pay your employees, track time, and file taxes effortlessly. Plus, you and your employees can view and update payroll information via an app-accessible anywhere, anytime, backed by 24/7 live customer service support.

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Obtain an Employer Identification Number

Next, your S-Corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Submit Your Articles
of Incorporation

To create an S-Corp in Tennessee, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of Tennessee. It establishes the basic elements of the corporation, such as the name and address of the corporation, the number and classes of stock, and certain indemnification provisions. Prior to filing, the Articles of Incorporation must be signed by each incorporator in order to authenticate it. The document can be repealed or amended with the approval of the Board of Directors.

If filing on your own, there are usually non-refundable fees that you have to pay with check or money order, additional fees for hand-delivery of forms, and long wait times whether in person or by mail--especially if you’re filing for an S-Corp during peak season. GovDocFiling can speed up the process for you. We offer an easy online application, expedited pricing, and a free business start-up guide and resources with all filings. You can apply here today.

Once your completed Tennessee Articles of Incorporation form is accepted, congratulations! Your company now exists as a recognized legal entity that is authorized to conduct business within the State of Tennessee.

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Submit Your Articles of Incorporation

To create an S-Corp in Tennessee, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of Tennessee.

Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your TN S-Corp. Basically, bylaws are rules of operation that create the company’s structure, ensuring that employees, shareholders, and executives are in the loop about how the business will be run.

Key points are covered in the corporate bylaws document, such as when annual meetings will be held, the size of your Board of Directors, and how this form will be amended if need be. In addition, member duties are explained and solutions to common disputes between parties are offered. Voting rights and salaries are discussed, and “what if” scenarios are presented. Having bylaws allows you to set up a structure that works for your business’s unique needs instead of adhering to default regulations within the state.

While bylaws are not required in some states, they are required in Tennessee. It is important to establish a set of bylaws that ensure your business runs smoothly. Filling out and filing this document prior to starting an S-Corporation in Tennessee provides protection for your business.

You can use this corporate bylaws generator to get a sense of what goes into a typical set of bylaws. To ensure it is done correctly, you can have a lawyer look over your bylaws prior to submission to ensure all necessary rules and scenarios are covered. Get legal advice from our partner Rocket Lawyer.

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Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your TN S-Corp.

Elect a Board of Directors

Tennessee law requires one or more director(s). The Board of Directors, while they are not involved in the daily tasks of running a business, represent or govern the corporation. Their duties include handling finances and fulfilling legal requirements, as well as determining the mission of the company.

People who do not work for your company can be a part of your Board of Directors. In fact, many businesses turn to lawyers or other business owners to fill in a spot on their Board of Directors. That way, they receive outside expertise from them, plus they may come with their own additional business contacts.

These board members must adhere to something called “the duty of loyalty,” which means that directors and officers of an S-Corporation can only make decisions without any personal economic conflict. The duty of loyalty is breached if something like a self-interested transaction occurs or a business opportunity is stolen. Plus, there is also the “duty of care” to consider. Members of the Board of Directors must make decisions that are in the best interests of the corporation at all times. For example, making a decision that causes serious losses for the shareholders would mean they are in violation of their duty of care--and they can be sued for this.

Your board members will have to hold meetings to make important decisions, such as issuing shares or amending something in the Articles of Incorporation. The Board of Directors typically receives equal voting rights (some states, like Delaware, are an exception) when making these decisions. During the first meeting of the S-Corporation's Board of Directors, directors can appoint officers, decide on bylaws, select a corporate bank, and more. All subsequent meetings must be held annually, though, of course, if more are needed, more can be held.

Minutes of the meeting, which is the recorded documentation of what was discussed or what happened during a meeting, must be recorded to exhibit transparency in business operations, but they do not need to be filed with the state. Instead, these should be kept with your other corporate records, such as Articles of Incorporation and bylaws. These documents should be saved for at least seven years in order to protect your company.

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Elect a Board of Directors

First, familiarize yourself with the roles within an S-Corporation. There are three groups:

  • Shareholders
  • Board of Directors
  • Officers

Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything--if there are multiple shareholders and directors. If a corporation has only one shareholder or director, the decision-making, of course, falls on that person without the need for a group meeting. Officers, on the other hand, do not operate in groups. An officer holding the position of president, chief executive officer, or treasurer, for example, is an agent of the corporation and has the authority to act on behalf of the corporation on his or her own. Within smaller S-Corps, directors are sometimes also officers and shareholders. In that case, even though the same person is serving in multiple roles, each role has very different responsibilities and is treated as such.

Shareholders are the owners of the corporation, and they elect the Board of Directors. The directors, in unison, oversee and direct corporation affairs and make business decisions. They employ officers who carry out the Board of Directors’ decisions. Officers are responsible for the day-to-day operations of the company. An officer can be terminated by the Board of Directors at any time. Tennessee requirements state that there should be as many officers as stated in the bylaws, but a minimum of one. One person may hold multiple offices. If there are multiple officers, one officer is responsible for maintaining all corporate records.

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Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything - if there are multiple shareholders and directors.

Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt. Unlike taking out a business loan, you do not pay interest that eats at your profits each month. The value of your business assets can be assessed by taking a look at what amount of your business assets are owned by shareholders vs. lenders. Corporations that have a higher proportion of the company owned by lenders makes an investment in the business appear riskier. If shareholders do invest in your business and purchase stock, keep in mind that if your business fails, you would have to pay back your loans and shareholders.

While there are many advantages to issuing stock, keep in mind that shareholders have an ownership stake in the company. This means that they have certain rights, such as the ability to participate in voting and the assurance that they will be collecting dividends. Profits will be shared and decisions will have to be made in unison. The more stock you issue to shareholders, the smaller your ownership in the business (and the less of a say you have in business major business decisions). On the plus side, when your business grows, you can buy out the other shareholders and get your ownership back.

Issuing stock is not a requirement for S-Corporations, but a privilege that you can make use of if you choose. Doing so can help you fund your business if you are growing and have large, expensive projects planned in the near future. In that case, you can decide how much capital you need and figure out how many shares you’d like to issue and at what price per share. You will already have a number for how many shares you have to offer (that was decided when you filed your Articles of Incorporation). To properly assess the accurate value of each share, determine your company’s net worth first. This will help you figure out what percentage of ownership you believe each share is worth.

Typically, appointed Board of Directors can issue stock whenever and to whomever, as long as the recipient has a brokerage account and is over 18 years old. But within an S-Corp, there are a few more limitations that a C-Corp does not have. While C-Corporations can be owned by any individual or legal entity--foreign or domestic--S-Corporations can only be owned by United States citizens or resident aliens. On top of that, an S-Corp does not allow an unlimited number of shareholders. It maxes out at 100. Also, S-Corps are not permitted to be owned by a C-Corp, another S-Corp, an LLC, a partnership, or many trusts. Lastly, unlike in a C-Corp where shareholders have the option between different stock classes (common, preferred, income, value, growth), an S-Corp only permits one stock class (common).

Another thing that can limit you here is if you’ve chosen to classify your S-Corp as a private corporation. This is typically a smaller corporation where the stock isn't offered to the public. A publiC-Corporation is authorized to sell their stock to the public, while a private company can’t trade its share on public stock exchanges. But a private corporation is not always small. Many big companies are privately held--such as Dell, Koch Industries, Deloitte, and Cargill. It can be harder for private corporations to raise funds, but it can be important in order to maintain family ownership.

Whoever your corporation may sell stock to, it’s important to have a shareholder agreement for protection. This would explain the shareholder’s rights and voting power within the S-Corporation. You will want to decide and let you shareholders know what kind of say they have in the organization or management of the company when they are issued stock. Tennessee requires an annual shareholder meeting, unless the directors are elected by written consent.

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Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt.

Familiarize Yourself with the
State’s Taxes and Licenses

Income from pass-through entities, such as a Tennessee Limited Liability Company and Tennessee S-Corp, “passes through” the business to the owners, who are required to report this information on their personal tax returns. In that case, each individual S-Corp member would then have to pay taxes on his or her share of the S-Corp’s income. The S-Corp itself does not pay federal income taxes. Tennessee has a personal net income tax rate of 5%. There is also a local gross receipts tax called the Business Tax that applies for all businesses with gross receipts over $10,000. If your business sells products or services, your S-Corp will also have to pay a sales tax rate of 7%. When coupled with local taxes, the sales tax can go up to 9.47%, making Tennessee currently the state with the highest sales tax.

In addition, there may be extra fees for certain insurances, permits, and licenses, depending on the state’s laws and the type of business you own. For example, you may need worker’s compensation, unemployment insurance, building permits, etc. Find out the requirements for S-Corps in the state you plan to run your business in. Permits and licences depending on profession can be on the Tennessee Department of Revenue website.

In addition, there may be extra fees for certain insurances, permits, and licenses, depending on the state’s laws and the type of business you own. For example, you may need worker’s compensation, unemployment insurance, building permits, etc. Licenses depending on profession can be found here.

In addition, Tennessee requires a minimal activity license if your taxable sales more than $3,000 but less than $10,000. This license is subject to an annual $15 fee and must be renewed each year. If you business is obligated to pay the Business Tax (it is if your taxable sales are $10,000 or more and if you live in a city that imposes the tax), then you must obtain a standard business license from your local county clerk before proceeding to conduct business. If your business has multiple locations, you must have standard business licenses for each location. This license is subject to an annual $15 fee and must be renewed each year as well. More information on both types of licenses can be found on the Tennessee Department of Revenue website.

Next, find out the requirements for S-Corps in the state you plan to run your business in. Keep in mind that different cities or counties may require certain permits and licenses that other regions do not. For example, if you plan to start an S-Corp in Nashville, TN, the city of Davidson County has its own requirements which you can see on the Davidson County Clerk website. You can also apply for specific permits for your Nashville S-Corp on the Nashville Government website. Contact your city or county to see if there are any insurances, permits, or licenses you might need to obtain before you begin operating your business.

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Familiarize Yourself with the State’s Taxes and Licenses

Income from pass-through entities, such as a Tennessee Limited Liability Company and Tennessee S-Corp, “passes through” the business to the owners, who are required to report this information on their personal tax returns. In that case, each individual S-Corp member would then have to pay taxes on his or her share of the S-Corp’s income.

File an Annual Renewal

Like most states, the State of Tennessee requires all S-Corp owners to file a report that updates all the information that the Tennessee Secretary of State has on file. This is called an Annual Report and it is due every year by the first day of the fourth month after the close of the fiscal year (usually April 1). When filing your report with the Tennessee Secretary of State, you must include a filing fee of $20, plus an optional $2.25 fee for online filings. There is no $50 per member fee, with a limit of $3000, as there is for Tennessee LLCs.

Tennessee Annual Report filing is available online or via printing and mailing the report. Instructions for both methods can be found on the Tennessee Secretary of State website. Filing an Annual Report is necessary for maintaining an active status after starting an S-Corp in Tennessee. Not filing the report or paying the fee will result in being presented a Tennessee corporation dissolution form, after which the state will dissolve your business.

Annual Reports can be rather complex–requiring the deciphering of gross receipts, dividends, interest, losses, and all Tennessee S-Corp fees - and you should seek the help of an accountant to ensure that it is filled out properly. Our partner, Bench, will provide you with a team of accountants to help you with your franchise tax reports, as well as general bookkeeping services with monthly financial statements and intuitive software to monitor your business profits and expenses.

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File an Annual Renewal

Like most states, the State of Tennessee requires all S-Corp owners to file a report that updates all the information that the Tennessee Secretary of State has on file. This is called an Annual Report and it is due every year by the first day of the fourth month after the close of the fiscal year (usually April 1).

Raise Funds for Your S-Corp

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business. Some of the most commonly-used options for obtaining funding for your S-Corp are:

  • Personal savings and assets
  • Informal loans from family and friends
  • Peer-to-peer lending sites or crowdfunding
  • Conventional bank loan
  • Short-term credit card loans
  • Government-sponsored grants/loan programs
  • Issuing stock to shareholders
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Personal Saving/Assets

Use your own savings, liquidate your assets, refinance your home, borrow your Roth IRA, etc.

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Informal Loans From Family/Friends

Ask friends or family members if they would be willing to invest in your business.

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Peer-to-Peer Landing Sites

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

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Conventional Bank Loan

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

Many new S-Corporation owners begin with their savings to fund their new business venture. If your savings are not enough, you may need to look into liquidating your personal assets or use them as collateral for loans. Can you sell your property or refinance your home? Do you have a retirement account such as a Traditional or Roth IRA? Usually, you can withdraw contributions you made to your IRA anytime, tax- and penalty-free, but that is not always the case. Find out what kind of fees your particular retirement plan will hit you with before using your IRA to fund your business.

Next, look into whether you know someone who shares your passion for your business and has the ability to contribute financially to your dream. These personal connections may want to support your startup idea. Although accepting an informal loan from a close friend or relative may feel safe, you should still protect yourself in case your relationship with the friend or family member goes sour. Have an official contract drawn up that all parties agree to. You can choose to have it notarized and have witnesses present for extra protection.

If you prefer not to borrow from friends and family, you can turn to a peer-to-peer (P2P) or social lending website. A P2P site is a place where investors seek out alternative opportunities to invest outside of stocks and bonds. You can apply for a loan and investors can decide whether or not they wish to fund your proposed business through interest-based loans. You can also look into crowdfunding, which is a way for small businesses or startups to raise money online through donations. These options typically require the ability to promote your business well, ensure complete transparency of where the funds go, and sometimes, the possibility of giving up ownership of a piece of your business. Make sure you look into all of the specifics.

You might be hoping to rely on a conventional loan from a bank, credit union or other lending institution for your main source of funds. In this case, you would need a formal business plan to present during your loan application process. If approved, you would be required to sign a legal contract, or a Promissory Note, outlining your obligations to the lender (which would primarily entail regular payments until the loan is paid off). If you are a first-time business owner, it is likely that you may be rejected initially. In that case, you can improve your application and reapply, or look into alternative sources of funding such as short-term financing via credit cards.

Using a credit card as a means of obtaining a fast and easy business loan would grant you use of immediate funds without the hassle and paperwork of loan applications or business plans. This is the best option for a brand new business, and we work with Nav to give our customers access to the credit they need. Visit our financing page and fill out the form for more information.

There are many credit cards that have low or no annual fees, low introductory interest rates, and other rewards depending on your spending. But be careful: make sure you pay back your credit card before the promotional low interest rate expires and skyrockets, or prior to having to pay large annual fees. And don’t make large purchases that can take years to pay back. For example, getting an equipment loan to purchase a piece of equipment is smarter than putting it on a credit card. Credit cards can be a good temporary solution if your business plan will allow you to pay back the debt quickly.

Another option at your disposal is a government-sponsored grant or loan program. Traditional lenders can turn to federal, state, or local governments to finance their business if such a grant or program is available. Typically, these programs consider sponsoring specific type of businesses or certain business owners, so be sure to research what government-sponsored loan your particular business or you might be eligible for.


Lastly, you can invite people to your team. S-Corporations may have a single person as the company's owner, or an unlimited number of shareholders participating in the ownership of the business. If you could see your businesses strategy succeeding with a partner or multiple partners, pool together your financial resources with another member to support your startup. An advantage to this funding option is your partner(s) may come with their own social network of business contacts and possibly even their own potential investors. To protect yourself, you can adjust your bylaws and ensure that you are still the primary owner of your Tennessee S-Corporation.

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Raise Funds for Your S-Corp

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business.

Create a Business Website

Creating a website for your Tennessee business is not a requirement but it is recommended to any business owner operating in the modern world. An online presence is important to have and maintain in order to ensure that your customers trust your company and know they will receive good customer service. Having a website gives your business legitimacy; your customers will visit your website and see that you are a real company with an actual website where they can read about the company’s origin and products/services and access contact information. Being able to read up on a company on their website leads to trust between a consumer and an organization. Also, dependable customer service is often offered through a website. By offering an email address, a contact form, and/or live chat with a representative on your website, you are making it easy for a customer to get connected with someone knowledgeable about the product/service. That allows a customer to know that there is a real person who cares about their satisfaction within the company that they are doing business with.

Start S-Corp formation

If the website is outdated or there is no website, a consumer may feel that you are not a legitimate business but a scam with no licenses to back up your business’ operations. You can avoid losing customers due to not having a professional website by ensuring that you have one. We work with GoNorth Websites to provide new businesses with high quality, cost-effective websites. Find out more about our custom designed, written, and developed websites, plus optional internet marketing add-ons that help you grow your business.

But websites needs maintenance too. You can’t simply have one created and never update it throughout the years. Policies and terms change, companies grow, products/services improve, and all of that (and more) can be reflected on the website. This keeps your customers up-to-date and offers a personal touch that is valued by any consumer.

In addition, you can look into having a blog or utilizing social media as another means of keeping your customers in-the-know and offering them a way to interact with your company. An online and/or social media presence can also lead to responsive customers who can offer you feedback on how you’re doing—plus, it’ll help get your company’s name out there.

If this all sounds like more than you’d like to deal with on your own, know that you can hire someone to maintain your website and social media presence for you—just like you can hire customer representatives to handle all correspondence. You can employ a web agency to monitor your website and/or a social media marketing agency to manage your social media campaign. A social media campaign is a coordinated marketing plan that can assist you with your business goals, which translates into extra advertising for your new business. Marketing your company can help you have a more profitable business and can aid you with paying back your business loans quicker—something any business owner aims for. Regardless of industry, all businesses should consider having a website as part of the first steps of starting a business.

The Benefits of Having an Online Presence
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You will show your customers that you are a legitimate business and build trust.
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Your company will be easy to correspond with and you can provide good, responsive customer service.
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Your customers will be kept up-to-date on all exciting news related to your business.


If you’ve decided that you want to have a website for your business, keep a few things in mind. When coming up with a website name, make sure that the domain contains your business name and is easy to type and remember for future visits. If you come up with a great web domain that you’d like to use for your business but you don’t plan to create a business website today, you may want to buy the URL to prevent others from acquiring it.

While brainstorming website URLs for your website, you’re going to either realize that you already know what your business is going to be named or that you have no idea what or how to name your business. Here are a few Tennessee corp name tips:

  • Follow S-Corp naming guidelines. A corporation’s name usually has to include words, like Corporation, Incorporated, Company, or Limited; or abbreviations, like Corp., Inc., Co., or Ltd. It’s also important not to use any words or phrases that will make it easy for someone to mistake your company for a federal agency; think “State Department.”
  • Find a unique name. If you’re getting an S-Corp in Tennessee you will need an original name that is not in use by another corporation. To check if a name has already been taken, you can search the Business Name Availability Database.
  • Make sure it is available as a web domain. This way, you can find out if another company outside of Tennessee has a corporation with the same name. In that case, think of something more original.
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Create a Business Website

Creating a website for your business is not a requirement but it is recommended to any business owner operating in the modern world.

Begin Operating Your Business

Once you become an official S-Corporation in the state of Tennessee, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings. This is mandatory if you don’t want your new business to run into any issues. If you’d rather not do these tasks yourself, you can sign up for a service that will automatically send you alerts ahead of crucial state and federal filing deadlines. Likewise, you can hire an accountant, a tax professional, and/or an attorney to ensure you are not making errors when keeping records, filling out paperwork, and making payments.

Next, make sure you’ve obtained all necessary permits, licenses, and insurances that your TN corp might need—and you’re good to go! Begin operating your Tennessee business with peace of mind, knowing that you are protected by an S-Corp in case anything unforeseeable affects your new business venture.

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Begin Operating Your Business

Once you become an official S-Corporation in the state of Tennessee, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings.


South Dakota S-Corp

Learn the Benefits of an S-Corp

When you decide to start a business, there are a number of business entities to choose from. Each has its own advantages and disadvantages, which we will introduce to you here. Prospective business owners should consult with professionals, such as a business attorney and accountants, before making the final decision. But educating yourself about the different types of corporations can help you assess what is the right business structure for you beforehand.

But first, are you ready to incorporate? It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Typically, “material size” means a business with revenue above $100,000. Once you know you’re ready, you have the option between choosing to classify your business as a C-Corporation or an S-Corporation. While S-Corps used to be the way to go for small businesses (it’s even been nicknamed the “Small BusinesS-Corporation”), thanks to the 2017 Tax Cuts and Jobs Act, C-Corps may now offer lower corporate tax rates to smaller business. Now, S-Corps are sometimes advisable for larger businesses. But keep in mind that C-Corps give you more options to expand and raise money, which can be very beneficial to a larger business. You may want to discuss the differences with a financial advisor or lawyer who can help break down all of the costs to help you assess what will work best for you.

Whether you choose to structure your business entity as a C or S-Corporation will determine how much you’ll pay in taxes, the ways you’re permitted to raise money, and the ease with which you can expand as your business grows. The standard and most common type of corporation is a C-Corporation. In fact, a C-Corp is the default type of corporation, and all S-Corps begin as a C-Corp or LLC. When you initially incorporate, your company will automatically become a standard C-Corp, and only after you file multiple forms can you transition to an S-Corp for federal tax purposes.

Why is an S-Corp a good idea for an e-commerce Business?

If there is an issue with a product, an S-Corp protects you. Compensation can only be taken from the S-Corp’s assets, not your personal assets.

Start Your S-Corp Now
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How do you know which type of corporation you want to register your business as when they are both so similar? Both types of corporations offer owners protection from individual liability, so shareholders (and directors, officers, and employees) are typically not personally responsible for business debts. C-Corps and S-Corps require similar paperwork. In addition, both are owned by shareholders, have a Board of Directors with annual meetings, and are managed by executive officers. It is also a requirement that both types of corporations pay annual fees, set up bylaws, and issue stock. Basically, an S-Corporation is the legal equivalent of a regular C-Corporation. Both have the same rights. They just pays taxes differently.

But why opt for an S-Corp? What are the benefits of setting up your state of South Dakota business as an S-Corp?

The main difference between a C and S-Corporation is that an S-Corp is not treated as a disregarded entity. It is a pass-through tax entity. While a C-Corp’s tax attributes are determined at the entity level, an S-Corp determines its own income, deductions, credits, etc. It spreads out the tax attributes among its owners (or to its sole owner) as part of shared ownership. Likewise, within an S-Corporation, the profits are passed on to the shareholders, who are then taxed based on their personal returns. Unlike a C-Corporation, an S-Corporation is required to file an annual information tax return. A few other differences are that S-Corps must have no more than 100 shareholders (all individuals, not corporations), have only one class of stock, and be owned by U.S. citizens or resident aliens.

There are advantages to establishing an S-Corp in South Dakota. Registering as an S-Corporation offers you:

  • The ability to operate as a corporation even if the owner leaves the company or passes away.
  • Pass-through taxation, as owners report their share of the profits and losses on their individual tax returns.
  • A way out of being taxed twice, the way you would be in a C-Corporation. There is no double taxation occurring--once as income and again as dividend income. You save more money!
  • The opportunity to issue shares of stock to increase the value of your business.
  • A deduction of 20% of all S-Corp income on your personal tax return, which can significantly reduce your tax burden.
  • The ability to write off the S-Corp’s losses on shareholders’ individual tax returns.
  • Annual tax filing requirements, unlike C-Corps which must file every quarter.
  • Corporate status, which means shareholders, directors, and officers are protected from sharing liability as long as there is no evidence of fraud or other misdeeds

But there are a few disadvantages to starting an S-Corp. One of those is the fact that, unlike a C-Corp, there are restrictions on ownership if you start a South Dakota S-Corp. S-Corporations can only be owned by United States citizens or resident aliens. Additionally, an S-Corp permits only 100 shareholders, while for a C-Corp, there is no limit. But overall, the benefits far outweigh the setbacks, and an S-Corporation is an excellent choice for many entrepreneurs looking to start a business in South Dakota.

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Learn the Benefits of an S-Corp

Educating yourself about the different types of corporations can help you assess what is the right business structure for you. It is advised that you should incorporate when you anticipate taking investments or when your business approaches material size or complexity.

Decide on a Registered Agent

Next, figure out who the Registered Agent for the corporation should be. The State of South Dakota requires every corporation in the state to have one. This enables the state to ensure the delivery of legal mail and that court documents can be tracked appropriately. The Registered Agent will also act as the contact point between the South Dakota Secretary of State and the corporation. Once you assign someone as your Registered Agent, they can receive official correspondence and documents on behalf of your business. 

A Registered Agent can be either an individual who is a resident of South Dakota or a business entity that is authorized to conduct business in the state (but not your own business). This can be you or someone else within your company, but keep in mind that this person will be through whom the state has contact with your business. This agent will receive legal documents (known as “Service of Process”) that pertain to your business. Your Registered Agent’s information would go on your most important South Dakota Secretary of State corporation forms.

Generally speaking, a Registered Agent in South Dakota must meet the following requirements:
  • Possess a physical street address located in South Dakota (no P.O. Box address).
  • Be available during regular business hours, typically Monday through Friday, 9 am to 5 pm.

Although the most comfortable option for a South Dakota Registered Agent would be to name yourself, a friend, or a family member, know that this information will be public record. Not only will the information be searchable on the South Dakota state website, it can also be republished on other sites as well. If you work from home and would much rather keep your home address private, this might not be the best choice. An alternative you can look into is hiring a South Dakota Commercial Registered Agent Service. We also offer a Registered Agent Service for a small charge that you can include as an add-on to your shopping cart.

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Decide on a Registered Agent

Next, figure out who the Registered Agent for the corporation should be. The State of South Dakota requires every corporation in the state to have one.

Obtain an Employer
Identification Number

Next, your South Dakota S-corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Fortunately, you do not have to waste time dealing with the IRS on your own. Going through the IRS directly to get your EIN can be complicated, confusing, and frustrating. GovDocFiling alleviates the angst and aggravation of filing government documents, including apply for an EIN, or Tax ID number. Plus, GovDocFiling has one low price for same-day processing and delivery of your EIN (other Tax ID filing services charge more than $300 for same-day service!). Easily apply for your EIN/Tax ID online here. In addition, if you have any questions about obtaining an EIN, we offer 24/7 email and phone support to help you through the process. Emails are answered quickly at info@govdocfiling.com.

If you know your S-Corp will have employees, you also know that you will have to pay them. Plus, you will need to figure out the amount you should deduct from their wages for tax purposes. Employees will need to fill out a W-4 Form, and you will need to give them pay stubs with their tax information. Before this all gets overwhelming, keep in mind that we offer Payroll, Tax and HR compliance solutions with our partner, ADP. We make it easy to pay your employees, track time, and file taxes effortlessly. Plus, you and your employees can view and update payroll information via an app-accessible anywhere, anytime, backed by 24/7 live customer service support.

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Obtain an Employer Identification Number

Next, your S-Corp will need to file with the IRS for an Employer Identification Number (EIN). This is a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer. All corporations require an EIN, even if you don’t have any employees.

Submit Your Articles
of Incorporation

To create an S-Corp in South Dakota, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of South Dakota. It establishes the basic elements of the corporation, such as the name and address of the corporation, the number and classes of stock, and certain indemnification provisions. Prior to filing, the Articles of Incorporation must be signed by each incorporator in order to authenticate it. The document can be repealed or amended with the approval of the Board of Directors.

If filing on your own, there are usually non-refundable fees that you have to pay with check or money order, additional fees for hand-delivery of forms, and long wait times whether in person or by mail--especially if you’re filing for an S-Corp during peak season. GovDocFiling can speed up the process for you. We offer an easy online application, expedited pricing, and a free business start-up guide and resources with all filings. You can apply here today.

Once your completed South Dakota Articles of Incorporation form is accepted, congratulations! Your company now exists as a recognized legal entity that is authorized to conduct business within the State of South Dakota.

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Submit Your Articles of Incorporation

To create an S-Corp in South Dakota, you will also need to register your business by filling out and submitting the Articles of Incorporation. The Articles of Incorporation is a form that should be filed (and maintained) with the state of South Dakota.

Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your SD S-Corp. Basically, bylaws are rules of operation that create the company’s structure, ensuring that employees, shareholders, and executives are in the loop about how the business will be run.

Key points are covered in the corporate bylaws document, such as when annual meetings will be held, the size of your Board of Directors, and how this form will be amended if need be. In addition, member duties are explained and solutions to common disputes between parties are offered. Voting rights and salaries are discussed, and “what if” scenarios are presented. Having bylaws allows you to set up a structure that works for your business’s unique needs instead of adhering to default regulations within the state.

While bylaws are not required in most states, they are required in South Dakota. It is important to establish a set of bylaws that ensure your business runs smoothly. Filling out and filing this document prior to starting an S-Corporation in South Dakota provides protection for your business.

You can use this corporate bylaws generator to get a sense of what goes into a typical set of bylaws. To ensure it is done correctly, you can have a lawyer look over your bylaws prior to submission to ensure all necessary rules and scenarios are covered. Get legal advice from our partner Rocket Lawyer.

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Draft Your Corporate Bylaws

First, what are bylaws? If you’ve heard of an Operating Agreement, this is just like that, but “bylaws” is the term usually used when referring to a corporation. There is no set criteria for what your bylaws should look like, but typically, they should set forth internal rules and procedures for your SD S-Corp.

Elect a Board of Directors

South Dakota law requires one or more director(s). The Board of Directors, while they are not involved in the daily tasks of running a business, represent or govern the corporation. Their duties include handling finances and fulfilling legal requirements, as well as determining the mission of the company.

People who do not work for your company can be a part of your Board of Directors. In fact, many businesses turn to lawyers or other business owners to fill in a spot on their Board of Directors. That way, they receive outside expertise from them, plus they may come with their own additional business contacts.

These board members must adhere to something called “the duty of loyalty,” which means that directors and officers of an S-Corporation can only make decisions without any personal economic conflict. The duty of loyalty is breached if something like a self-interested transaction occurs or a business opportunity is stolen. Plus, there is also the “duty of care” to consider. Members of the Board of Directors must make decisions that are in the best interests of the corporation at all times. For example, making a decision that causes serious losses for the shareholders would mean they are in violation of their duty of care--and they can be sued for this.

Your board members will have to hold meetings to make important decisions, such as issuing shares or amending something in the Articles of Incorporation. The Board of Directors typically receives equal voting rights (some states, like Delaware, are an exception) when making these decisions. During the first meeting of the S-Corporation's Board of Directors, directors can appoint officers, decide on bylaws, select a corporate bank, and more. All subsequent meetings must be held annually, though, of course, if more are needed, more can be held.

Minutes of the meeting, which is the recorded documentation of what was discussed or what happened during a meeting, must be recorded to exhibit transparency in business operations, but they do not need to be filed with the state. Instead, these should be kept with your other corporate records, such as Articles of Incorporation and bylaws. These documents should be saved for at least seven years in order to protect your company.

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Elect a Board of Directors

First, familiarize yourself with the roles within an S-Corporation. There are three groups:

  • Shareholders
  • Board of Directors
  • Officers

Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything--if there are multiple shareholders and directors. If a corporation has only one shareholder or director, the decision-making, of course, falls on that person without the need for a group meeting. Officers, on the other hand, do not operate in groups. An officer holding the position of president, chief executive officer, or treasurer, for example, is an agent of the corporation and has the authority to act on behalf of the corporation on his or her own. Within smaller S-Corps, directors are sometimes also officers and shareholders. In that case, even though the same person is serving in multiple roles, each role has very different responsibilities and is treated as such.

Shareholders are the owners of the corporation, and they elect the Board of Directors. The directors, in unison, oversee and direct corporation affairs and make business decisions. They employ officers who carry out the Board of Directors’ decisions. Officers are responsible for the day-to-day operations of the company. An officer can be terminated by the Board of Directors at any time. South Dakota requirements state that there should be as many officers as stated in the bylaws, but a minimum of one. One person may hold multiple offices. If there are multiple officers, one officer is responsible for maintaining all corporate records.

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Appoint Corporate Officers

Shareholders and directors only have the ability to make decisions as part of a group, after holding group meetings and taking votes. An individual shareholder or director does not have the power to do anything - if there are multiple shareholders and directors.

Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt. Unlike taking out a business loan, you do not pay interest that eats at your profits each month. The value of your business assets can be assessed by taking a look at what amount of your business assets are owned by shareholders vs. lenders. Corporations that have a higher proportion of the company owned by lenders makes an investment in the business appear riskier. If shareholders do invest in your business and purchase stock, keep in mind that if your business fails, you would have to pay back your loans and shareholders.

While there are many advantages to issuing stock, keep in mind that shareholders have an ownership stake in the company. This means that they have certain rights, such as the ability to participate in voting and the assurance that they will be collecting dividends. Profits will be shared and decisions will have to be made in unison. The more stock you issue to shareholders, the smaller your ownership in the business (and the less of a say you have in business major business decisions). On the plus side, when your business grows, you can buy out the other shareholders and get your ownership back.

Issuing stock is not a requirement for S-Corporations, but a privilege that you can make use of if you choose. Doing so can help you fund your business if you are growing and have large, expensive projects planned in the near future. In that case, you can decide how much capital you need and figure out how many shares you’d like to issue and at what price per share. You will already have a number for how many shares you have to offer (that was decided when you filed your Articles of Incorporation). To properly assess the accurate value of each share, determine your company’s net worth first. This will help you figure out what percentage of ownership you believe each share is worth.

Typically, appointed Board of Directors can issue stock whenever and to whomever, as long as the recipient has a brokerage account and is over 18 years old. But within an S-Corp, there are a few more limitations that a C-Corp does not have. While C-Corporations can be owned by any individual or legal entity--foreign or domestic--S-Corporations can only be owned by United States citizens or resident aliens. On top of that, an S-Corp does not allow an unlimited number of shareholders. It maxes out at 100. Also, S-Corps are not permitted to be owned by a C-Corp, another S-Corp, an LLC, a partnership, or many trusts. Lastly, unlike in a C-Corp where shareholders have the option between different stock classes (common, preferred, income, value, growth), an S-Corp only permits one stock class (common).

Another thing that can limit you here is if you’ve chosen to classify your S-Corp as a private corporation. This is typically a smaller corporation where the stock isn't offered to the public. A publiC-Corporation is authorized to sell their stock to the public, while a private company can’t trade its share on public stock exchanges. But a private corporation is not always small. Many big companies are privately held--such as Dell, Koch Industries, Deloitte, and Cargill. It can be harder for private corporations to raise funds, but it can be important in order to maintain family ownership.

Whoever your corporation may sell stock to, it’s important to have a shareholder agreement for protection. This would explain the shareholder’s rights and voting power within the S-Corporation. You will want to decide and let you shareholders know what kind of say they have in the organization or management of the company when they are issued stock. Like most states, South Dakota requires an annual shareholder meeting.

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Issue Stock to your Shareholders

One of the benefits of having an S-Corporation is being able to issue shares of stock to raise funds for your business. Shares represent the amount of money invested by the shareholders in the company. Issuing stock to your shareholders allows you to finance your business without relying on debt.

Familiarize Yourself with the
State’s Taxes and Licenses

Income from pass-through entities, such as a South Dakota Limited Liability Company and South Dakota S-Corp, “passes through” the business to the owners, who are required to report this information on their personal tax returns. In that case, each individual S-Corp member would then have to pay taxes on his or her share of the S-Corp’s income. The S-Corp itself does not pay federal income taxes, but there are other various taxes that the business will have to pay. For example, employers owe payroll tax on employees wages. Good news for prospective business owners in South Dakota: the state does not have a general sales, use, or transaction tax.

In addition, there may be extra fees for certain insurances, permits, and licenses, depending on the state’s laws and the type of business you own. For example, you most likely will need worker’s compensation, unemployment insurance, real estate licenses, etc. Information on South Dakota licenses can be found on the Department of Labor and Regulation (DLR) website. Find out what the requirements are for the location where you plan to open your business. Contact your city or county to see if there are any insurances, permits, or licenses you might need to obtain before you begin operating your business.

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Familiarize Yourself with the State’s Taxes and Licenses

Income from pass-through entities, such as a South Dakota Limited Liability Company and South Dakota S-Corp, “passes through” the business to the owners, who are required to report this information on their personal tax returns. In that case, each individual S-Corp member would then have to pay taxes on his or her share of the S-Corp’s income.

File an Annual Renewal

Like most states, the State of South Dakota requires all S-Corp owners to file a yearly report that updates all the information that the South Dakota Secretary of State has on file. This report is typically called the Annual Report. It is due by the first day of the registration anniversary month, meaning if you started your business on March 15, then your annual report is due every year by March 1. You must include a filing fee of $50 with your report, payable to the South Dakota Secretary of State. Online filing for Annual Reports can be done here. Filing an Annual Report is necessary for maintaining an active status after starting an S-Corp in South Dakota. Not filing the report or paying the fee will result in being presented a South Dakota S-Corp dissolution form, after which the state will dissolve your business.

The report can be rather complex–requiring the deciphering of gross receipts, dividends, interest, losses, and all South Dakota S-Corp fees–and you should seek the help of an accountant to ensure that it is filled out properly. Our partner, Bench, will provide you with a team of accountants to help you with your franchise tax reports, as well as general bookkeeping services with monthly financial statements and intuitive software to monitor your business profits and expenses.

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File an Annual Renewal

Like most states, the State of South Dakota requires all S-Corp owners to file a yearly report that updates all the information that the South Dakota Secretary of State has on file. This report is typically called the Annual Report. It is due by the first day of the registration anniversary month, meaning if you started your business on March 15, then your annual report is due every year by March 1.

Raise Funds for Your S-Corp

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business. Some of the most commonly-used options for obtaining funding for your S-Corp are:

  • Personal savings and assets
  • Informal loans from family and friends
  • Peer-to-peer lending sites or crowdfunding
  • Conventional bank loan
  • Short-term credit card loans
  • Government-sponsored grants/loan programs
  • Issuing stock to shareholders
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Personal Saving/Assets

Use your own savings, liquidate your assets, refinance your home, borrow your Roth IRA, etc.

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Informal Loans From Family/Friends

Ask friends or family members if they would be willing to invest in your business.

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Peer-to-Peer Landing Sites

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

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Conventional Bank Loan

S-Corp members might contribute different proportions of capital and sweat equity, and they must determine for themselves what percentage of the profits/losses goes to whom.

Many new S-Corporation owners begin with their savings to fund their new business venture. If your savings are not enough, you may need to look into liquidating your personal assets or use them as collateral for loans. Can you sell your property or refinance your home? Do you have a retirement account such as a Traditional or Roth IRA? Usually, you can withdraw contributions you made to your IRA anytime, tax- and penalty-free, but that is not always the case. Find out what kind of fees your particular retirement plan will hit you with before using your IRA to fund your business.

Next, look into whether you know someone who shares your passion for your business and has the ability to contribute financially to your dream. These personal connections may want to support your startup idea. Although accepting an informal loan from a close friend or relative may feel safe, you should still protect yourself in case your relationship with the friend or family member goes sour. Have an official contract drawn up that all parties agree to. You can choose to have it notarized and have witnesses present for extra protection.

If you prefer not to borrow from friends and family, you can turn to a peer-to-peer (P2P) or social lending website. A P2P site is a place where investors seek out alternative opportunities to invest outside of stocks and bonds. You can apply for a loan and investors can decide whether or not they wish to fund your proposed business through interest-based loans. You can also look into crowdfunding, which is a way for small businesses or startups to raise money online through donations. These options typically require the ability to promote your business well, ensure complete transparency of where the funds go, and sometimes, the possibility of giving up ownership of a piece of your business. Make sure you look into all of the specifics.

You might be hoping to rely on a conventional loan from a bank, credit union or other lending institution for your main source of funds. In this case, you would need a formal business plan to present during your loan application process. If approved, you would be required to sign a legal contract, or a Promissory Note, outlining your obligations to the lender (which would primarily entail regular payments until the loan is paid off). If you are a first-time business owner, it is likely that you may be rejected initially. In that case, you can improve your application and reapply, or look into alternative sources of funding such as short-term financing via credit cards.

Using a credit card as a means of obtaining a fast and easy business loan would grant you use of immediate funds without the hassle and paperwork of loan applications or business plans. This is the best option for a brand new business, and we work with Nav to give our customers access to the credit they need. Visit our financing page and fill out the form for more information.

There are many credit cards that have low or no annual fees, low introductory interest rates, and other rewards depending on your spending. But be careful: make sure you pay back your credit card before the promotional low interest rate expires and skyrockets, or prior to having to pay large annual fees. And don’t make large purchases that can take years to pay back. For example, getting an equipment loan to purchase a piece of equipment is smarter than putting it on a credit card. Credit cards can be a good temporary solution if your business plan will allow you to pay back the debt quickly.

Another option at your disposal is a government-sponsored grant or loan program. Traditional lenders can turn to federal, state, or local governments to finance their business if such a grant or program is available. Typically, these programs consider sponsoring specific type of businesses or certain business owners, so be sure to research what government-sponsored loan your particular business or you might be eligible for.


Lastly, you can invite people to your team. S-Corporations may have a single person as the company's owner, or an unlimited number of shareholders participating in the ownership of the business. If you could see your businesses strategy succeeding with a partner or multiple partners, pool together your financial resources with another member to support your startup. An advantage to this funding option is your partner(s) may come with their own social network of business contacts and possibly even their own potential investors. To protect yourself, you can adjust your bylaws and ensure that you are still the primary owner of your South Dakota S-Corporation.

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Raise Funds for Your S-Corp

You can’t start a business with zero capital. There are legal fees, document filing fees, taxes, employees to pay, as well as the costs of operating a business.

Create a Business Website

Creating a website for your South Dakota business is not a requirement but it is recommended to any business owner operating in the modern world. An online presence is important to have and maintain in order to ensure that your customers trust your company and know they will receive good customer service. Having a website gives your business legitimacy; your customers will visit your website and see that you are a real company with an actual website where they can read about the company’s origin and products/services and access contact information. Being able to read up on a company on their website leads to trust between a consumer and an organization. Also, dependable customer service is often offered through a website. By offering an email address, a contact form, and/or live chat with a representative on your website, you are making it easy for a customer to get connected with someone knowledgeable about the product/service. That allows a customer to know that there is a real person who cares about their satisfaction within the company that they are doing business with.

Start S-Corp formation

If the website is outdated or there is no website, a consumer may feel that you are not a legitimate business but a scam with no licenses to back up your business’ operations. You can avoid losing customers due to not having a professional website by ensuring that you have one. We work with GoNorth Websites to provide new businesses with high quality, cost-effective websites. Find out more about our custom designed, written, and developed websites, plus optional internet marketing add-ons that help you grow your business.

But websites needs maintenance too. You can’t simply have one created and never update it throughout the years. Policies and terms change, companies grow, products/services improve, and all of that (and more) can be reflected on the website. This keeps your customers up-to-date and offers a personal touch that is valued by any consumer.

In addition, you can look into having a blog or utilizing social media as another means of keeping your customers in-the-know and offering them a way to interact with your company. An online and/or social media presence can also lead to responsive customers who can offer you feedback on how you’re doing—plus, it’ll help get your company’s name out there.

If this all sounds like more than you’d like to deal with on your own, know that you can hire someone to maintain your website and social media presence for you—just like you can hire customer representatives to handle all correspondence. You can employ a web agency to monitor your website and/or a social media marketing agency to manage your social media campaign. A social media campaign is a coordinated marketing plan that can assist you with your business goals, which translates into extra advertising for your new business. Marketing your company can help you have a more profitable business and can aid you with paying back your business loans quicker—something any business owner aims for. Regardless of industry, all businesses should consider having a website as part of the first steps of starting a business.

The Benefits of Having an Online Presence
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You will show your customers that you are a legitimate business and build trust.
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Your company will be easy to correspond with and you can provide good, responsive customer service.
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Your customers will be kept up-to-date on all exciting news related to your business.


If you’ve decided that you want to have a website for your business, keep a few things in mind. When coming up with a website name, make sure that the domain contains your business name and is easy to type and remember for future visits. If you come up with a great web domain that you’d like to use for your business but you don’t plan to create a business website today, you may want to buy the URL to prevent others from acquiring it.

While brainstorming website URLs for your website, you’re going to either realize that you already know what your business is going to be named or that you have no idea what or how to name your business. Here are a few South Dakota corp name tips:

  • Follow S-Corp naming guidelines. A corporation’s name usually has to include words, like Corporation, Incorporated, Company, or Limited; or abbreviations, like Corp., Inc., Co., or Ltd. It’s also important not to use any words or phrases that will make it easy for someone to mistake your company for a federal agency; think “State Department.”
  • Find a unique name. If you’re getting an S-Corp in South Dakota you will need an original name that is not in use by another corporation. To check if a name has already been taken, you can try the Name Availability Search. If you are not ready to file an S-Corp in South Dakota today but want to reserve a name in the meantime, you can do so by filling out the form (and paying a $25 fee) here. This puts a hold on the name for 120 days.
  • Make sure it is available as a web domain. This way, you can find out if another company outside of South Dakota has a corporation with the same name. In that case, think of something more original.
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Create a Business Website

Creating a website for your business is not a requirement but it is recommended to any business owner operating in the modern world.

Begin Operating Your Business

Once you become an official South Dakota corporation, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings. This is mandatory if you don’t want your new business to run into any issues. If you’d rather not do these tasks yourself, you can sign up for a service that will automatically send you alerts ahead of crucial state and federal filing deadlines. Likewise, you can hire an accountant, a tax professional, and/or an attorney to ensure you are not making errors when keeping records, filling out paperwork, and making payments.

Next, make sure you’ve obtained all necessary permits, licenses, and insurances that your SD corp might need — and you’re good to go! Begin operating your South Dakota business with peace of mind, knowing that you are protected by an S-Corp in case anything unforeseeable affects your new business venture.

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Begin Operating Your Business

Once you become an official South Dakota corporation, make sure you keep your S-Corp compliant. Remember all important dates and make all necessary payments on time. Know all of the laws regarding the issuing of stocks. Host all necessary annual meetings.