Do-it-yourself Massachusetts S Corporation Kit

If you own a small business in Massachusetts, you may want to consider forming an S corporation. Why? Simple. Running your business as an S corporation saves you hundreds or thousands of dollars in payroll and income taxes.

And the good news doesn't stop there, fortunately. You might logically assume that something like an S corporation is tricky to set up. But you won't find the process difficult. You simply take three relatively simple steps:

1. Form an Eligible Entity

An eligible entity is the platform from which you make the election to be treated as an S corporation. In most cases, a business will choose a limited liability company or a regular corporation as its platform.

(To clear up any confusion, you can use any eligible entity to form an S corporation, it doesn't have to be a corporation: an LLC, a regular corporation, a limited liability partnership, even though it's called an "S corporation" you don't have to use an actual corporation to form it.)

If you choose to form an LLC, you fill out a Certificate of Organization and submit it (along with a $500 check for the filing fee) to the Secretary of the Commonwealth in Boston. If you want to use a traditional corporation, you fill out an Articles of Organization form (and $275) and send it to Boston as well.

2. Get an EIN for your business

After you establish your eligible entity you need an EIN, or Employer Identification Number, for your business. An EIN acts like a social security number for your business. To get your EIN, you fill out an SS-4 form and submit it to the IRS. This form can be found available for download on the IRS website. The SS-4 form isn't quite as simple as the previous state forms, so you may need to take a bit more time when filling it out.

3. Make the S Corp Election

Once you receive your EIN, you can take the final step: making the election to be treated as an S corporation. For this, you fill out a 2553 form, which tells the IRS you wish to be treated using the tax law described in Subchapter S of the tax code. Submit this form to the Internal Revenue Service Center in Cincinnati, Ohio. The IRS will use this form to make sure you followed correct procedure and that you're eligible to make the election.

Note: If you form an S corporation in a state other than Massachusetts, you may need to send this form to the other IRS Center that processes subchapter S elections, the one located in Ogden, Utah. Different states are required to send this form to different places so be sure to check if you are not in Massachusetts.

If you don't feel totally confident completing this process by yourself, consider purchasing and downloading one of my do-it-yourself kits. The kits represent an easy and caffordable alternative to paying an accountant or attorney hundreds of dollars to do this work for you. Note that I've created two version of the kit: One for LLCs and one for regular corporations.

Massachusetts S Corporation Kit - LLC Version

This is the method I (and many other knowledgeable professionals) recommend most for forming an S corporation. Compared to regular corporations, LLCs are easier to manage and maintain. This do-it-yourself kit describes the pros and cons associated with forming an LLC in Massachusetts, along with detailed steps for the entire process. For reference, I include completed examples of all the forms involved, and as a bonus I add two sample sets operating agreements which you can use for your LLC; one set is for single-member (or single owner) LLCs, and the other set is for multiple-member (or multiple owner) LLCs.

Massachusetts S Corporation Kit - Corporation Version

In some cases, a regular corporation may be a better fit for your business than an LLC. It might, for instance, be really important to have "corporation" or "inc" in the name of a business, and for that you would need to form a regular corporation instead of an LLC. In this do-it-yourself kit, I discuss the pros and cons of incorporating in Massachusetts and how to balance them. I also give clear, detailed steps to guide you through the entire process along with examples of completed forms for reference. As a bonus, I include a set of sample corporate bylaws, which you or your attorney can use as a starting point for creating your own bylaws.

 

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.

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Using an S corporation for your business? To maximize savings, you need to minimize the salary paid to shareholders. But this decision is tricky.

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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.

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