Do-It-Yourself Idaho S Corporation Kit

As a business owner, you've probably heard about the benefits of S corporation status. S corporations can save Idaho business owners hundreds or thousands of dollars a year in payroll taxes and income taxes.

But here's something you may not know. You can set up one of these money savers yourself, in a few minutes, by taking three, relatively simple steps:

Step 1: Establish an Eligible Entity

To begin, you must establish an eligible entity. The eligible entity is the platform on top of which you build your S corporation. Limited liability companies and traditional corporations are the most common eligible entities, although you technically do have other options.

To create an LLC, you fill out and submit a Certificate of Organization form to the Idaho Secretary of State in Boise. To create a corporation, you fill out and submit Articles of Incorporation to the Secretary. (Note: The Secretary of State's website provides free downloadable versions of both forms and instructions.)

Step 2: Get an EIN for Your Business

After establishing your LLC or corporation, you fill out an SS-4 form to apply for an Employer Identification Number with the IRS. An Employer Identification Number, or EIN, is like a business's Social Security Number. The SS-4 form is available from the IRS website. The IRS should process your application in a few weeks.

Step 3: Make the S Corporation Election

Once you receive your EIN from the Internal Revenue Service, you can make the S corporation election. Technically, this means you elect to be treated using the laws in Subchapter S of the tax code. To make the S corporation election, fill out a 2553 form and submit it to the Internal Revenue Service Center in Ogden, Utah.

Note:If you plan to make the S corporation election in a state other than Idaho, check which location the IRS requires you to submit the form to. The IRS actually uses two different service centers and the one you send your 2553 to depends on the state in which your business operates.

You may not need any more help for setting up your Idaho S corporation than I've provided here. If you would like more help, however, I've created two affordable versions of a do-it-yourself Idaho S corporation kit. One version explains how to set up an S corporation using an LLC as your eligible entity. The second version explains the process using a traditional corporation.

Idaho Option One: LLC Version

In most cases, I recommend using a limited liability company as the base for your S corporation. For almost every business, LLCs benefit the business owner more because they require less work to maintain and manage. This do-it-yourself kit breaks down the three steps for setting up an LLC into smaller, manageable pieces. For reference, it includes completed examples of all the forms you will use so you know what your forms should look like.

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Idaho Option Two: Corporation Version

In a few rare, specific situations, a corporation may benefit a business owner more than an LLC. If, for instance, a business gains credibility by having "Corp" or "Inc" in the business name, the business owner may choose to use a corporation over an LLC. The corporation version of the S corporation do-it-yourself kit provides detailed instructions for the entire process, as well as completed examples of all the forms, and a discussion of how to balance the pros and cons of incorporating in Idaho. As a bonus, I included a set of sample corporate bylaws, which can be used by you or your attorney as a jumping-off point when you write your own 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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