An S-corp is set up after you’ve set up your single member LLC. So, first you’d set-up your LLC and then you’d complete the proper documents for the IRS. However, there are some qualifications for an S-corp to be created:
- The LLC must meet the qualifications of being a domestic corporation.
- Shareholders must meet the definition of allowable. This can be individuals, certain types of trusts, or estates. It cannot be a partnership, a corporation, or a non-resident alien.
- There can be no more than 100 shareholders. Since you mentioned “single member,” I am going to presume that you’re the only person involved or who would be involved on the ownership side.
- If you have stock, it can only be one class of stock.
- You cannot be an ineligible corporation. Examples of ineligible corporations include financial institutions, insurance companies, and domestic international sales corporations.
You would complete Form 2553 Election by a Small Business Corporation and it must be signed by all of your shareholders. Since you said this would be single member, that should be easy enough!
The IRS has. You’ll learn which form(s) to use for income tax, estimated tax, and employment tax. Before you go through with this, make sure that you really are sure that this is the best decision for your business and for you.
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