Do-it-yourself Arizona S Corporation Kit

Setting up an S corporation can save your Arizona business hundreds or thousands of dollars in income and payroll taxes. And, while you could pay an accountant or attorney around $500 to set one up for you, you will probably find the set up quite easy to do yourself. Essentially the process requires three straightforward steps.

1. Create an Eligible Entity

The eligible entity is the base for your S corporation. Both traditional corporations and limited liability companies are good options for S Corporation set up. To form an LLC, fill out and submit an "Articles of Organization" form to the Arizona Corporation Commission in Phoenix. To form a corporation, you also fill out an "Articles of Incorporation" form, and send it to the Arizona Corporation Commission in Phoenix.

Note: The Arizona Corporations Commissions website has downloadable copies of this form available on their website (http://www.azcc.gov/Divisions/Corporations/forms/formsindex.asp).

2. Obtain an EIN for Your Business

Once you establish your eligible entity, the next step is getting your EIN, or Employer Identification Number, from the Internal Revenue Service. This is like a Social Security Number for a business. To get your EIN, fill out an SS-4 form. You can download this form from the IRS website. As a heads up, this form is a bit more complex than the state forms involved in the first step. Take time to carefully fill it out.

3. Make the S Corporation Election

Once you receive your EIN from the Internal Revenue Service, make the S corporation election. To do this, fill out a 2553 form, also available for download from the IRS website. This form is also fairly complex so take care when completing it. Send this form to the Internal Revenue Service Center in Ogden, Utah.

This form tells the IRS that you elect to have your business treated using the tax law described in Subchapter S of the tax code, which is where the name "S corporation" comes from. This is also why you don't have to be a corporation to form an S corporation, you are simply electing to use a certain set of rules.

If the brief instructions I've provided here give you enough confidence to form your S corporation with no further hesitation, by all means get started right away. If you want some further guidance through this process, please consider purchasing one of my affordable do-it-yourself S corporation kits. I wrote two versions of the kits, one for businesses using an LLC to make the election, and another for businesses using a traditional corporation to make the election.

Arizona Kit Version 1: Using an LLC

Almost every business should use an LLC as the base for their S corporation. LLCs are less of a hassle to maintain than regular corporations. My do-it-yourself S corporation kit for LLCs examines the positives and negatives of forming an LLC in Arizona. Detailed instructions walk you through the entire process of creating an LLC, getting your EIN from the IRS and making the S corporation election. I include filled-out examples of every form you'll use for reference, and as an added bonus I wrote two sets of sample operating agreements, which your new LLC could use. One set of operating agreements is for single owner (known officially as single member) LLCs, and the other set is for multiple owner (multiple member) LLCs.

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Arizona Kit Version 2: Using a Corporation

In a few certain circumstances, a regular corporation may benefit your business more than an LLC. For example, some professions may assume that a business is more credible if "Corporation" or "Inc" is in the business name. In that case, my do-it-yourself kit for traditional corporations will help make forming your S corporation as easy as possible. This kit explains the benefits and drawbacks of incorporating in Arizona, and how to balance them. Like the LLC version, this kit gives clear, comprehensive instructions to direct you as you complete the steps of forming your own S corporation. To further assist you in setting up your new corporation, I included a set of sample corporate bylaws, which you will need for your corporation. You or your attorney may use these bylaws when drafting up your own corporate bylaws.

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Additional Information You May Find Useful

If you want additional information about how to maximize the tax savings related to running a business or investment venture, you may also be interested in one of our downloadable e-books (see descriptions below). Each book covers a category of tax planning topics that easily save a business owner significant amounts of income or self-employment taxes (potentially thousands of dollars a year) and is instantly downloadable.

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