An S corp is a great entity option for many small and medium-sized businesses. If you’ve determined that an S corp is right for your business,  you may be wondering how to start an S corp. I’ve outlined the key steps below:

1. Start a business and obtain an EIN from the IRS – Select a business name and register for an employer identification number (EIN) with the IRS. It’s free. You can apply for an EIN at the following link – Click Here. 
2. Incorporate as an LLC or C Corporation with your Secretary of State – We recommend incorporating your business as an LLC in the state where you reside. This is the simplest and most cost-effective option. Registering as a C corp often comes with additional compliance requirements compared to an LLC. If you incorporate in a state outside your resident state, you need to engage a registered agent to communicate with the state on your behalf. Basically, incorporating in your resident state minimizes cost and compliance requirements. You cannot start your business as an S corp. An S corp is a tax election. Your legal entity must be an LLC or C corp and then you can elect your business to be taxed as an S corp.
3. File Form 2553, Election by a Small Business Corporation – This is where you officially start an S corp. Once you complete, sign, and fax in a completed Form 2553, you are all set with the necessary paperwork. You can find instructions on how to complete a Form 2553 here – Click Here. 
4. Wait for IRS Acceptance of the S Corp Election – You should hear back from the IRS within 2-3 months that your S corp election has been accepted. It’s crucial that you wait for approval from the IRS before filing your first S corp tax return. 
5. Issue and Purchase Stock – The business issues stock to the shareholders and shareholders pay for the issued shares. When starting a new business the value of the stock is usually minimal, most commonly, $0 or $1. 

• Creating a board of directors and holding regular meetings
• Maintain meeting minutes
• Process payroll
• File annual reports with state agencies you registered with
• File the annual Form 1120-S tax return with the IRS (and any state returns)