Do-it-yourself Delaware S Corporation Kit
S corporations can save business owners thousands of dollars a year in income and payroll taxes, and the set-up is quite simple. There's no need to pay an accountant or attorney $300 or $500 to do the set-up for you. You can do the work yourself using one of my simple do-it-yourself kits.
Before you begin, it's worth mentioning that many national and multi-state businesses choose to incorporate in Delaware. Its business-friendly tax and corporation laws encourage a lot of out-of-state businesses to make Delaware their legal home. If your business operates outside Delaware and you want to take advantage of its friendly business laws, however, take a peek at my Which State to Use for an S Corporation page before you start. You need to tread carefully here if you're a small business...
After confirming which state you want to form your S corporation in, you can begin the simple set-up steps:
Create Your Eligible Entity
In most cases, an eligible entity is a corporation or a limited liability company. Either works as the foundation for your S corporation.
To form an LLC, fill out a Certificate of Formation and submit it to the Delaware Division of Corporations in Dover. For a standard corporation, fill out and submit a Certificate of Incorporation to the Division of Corporations as well. The State of Delaware website has both of these forms, along with any form you may need throughout the life of your business.
Obtain an Employer Identification Number
After establishing an eligible entity, fill out an SS-4 form to apply for an Employer Identification Number, or EIN. An EIN is like a Social Security Number for businesses. The IRS website (www.irs.gov) has free downloads of this form. You should receive your EIN a few weeks after you submit the SS-4 form.
Make the S Corporation Election
Once you receive your EIN, you can elect for the IRS to treat your business as an S corporation. Fill out a 2553 form, also available from the IRS website. After submitting this form, the IRS evaluates whether or not your business can rightfully make this election, and that you followed correct procedure in doing so.
If you would like a set of more detailed instructions, I created two do-it-yourself kits to guide you through each step of the process.
Delaware Kit Version 1: Using an LLC
For most businesses, a limited liability company yields more benefits than a corporation. My LLC kit provides detailed instructions for the entire process, as well as an in-depth analysis of the benefits and drawbacks of forming an LLC in Delaware. To further assist you with your new LLC, I added two example sets of LLC operating agreements: one for single-member LLCs and one for multiple-member LLCs.Purchase and Download
Delaware Kit Version 2: Using a Corporation
I also created a kit for business owners who use a regular corporation as the base for their S corporation. Like the LLC version, this kit clearly explains all the steps involved in setting up an S Corporation, and explains the benefits and drawbacks associated with incorporating in Delaware. Additionally, I include a set of sample corporate bylaws for you or your lawyer to use as a starting point when drafting your own bylaws.Purchase and Download
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.
Often the best tax saving tool private companies have? The Section 199A deduction which allows them to avoid taxes on the last 20 percent of their income.Read More
Using an S corporation for your business? To maximize savings, you need to minimize the salary paid to shareholders. But this decision is tricky.Read More
Nearly secret, the federal government's employee retention credits provide tremendous payroll tax savings for most small businesses... A new book from our firm explains.Info here