Do-it-yourself New Mexico S Corporation Kit

Here's a bit of good news for New Mexico business owners: S corporation status can save a business thousands of dollars a year in income and payroll taxes. And here's some more good news: Most business owners can set up an S corporation without the help of an attorney or online incorporation service. You just need to follow three simple steps:

Note: If you need or want more information about how an S corporation reduces taxes, refer here. If you need general information about the S corporation option, refer to the FAQ.

Step One: Form the Base for Your S Corporation

Before you set up an S corporation, you will need to set up an eligible entity to function as the base for your S corporation. Limited liability companies and traditional corporations both work well for this.

Accordingly, you first need to either fill out the two-page Articles of Organization form for an LLC or the three-page Articles of Incorporation form for a corporation to create your base. Both forms require a $50 filing fee. Submit your form and the filing fee to the Corporations Bureau of the New Mexico Public Relation Commission.

Step Two: Apply for an EIN

Once you establish your eligible entity, you can apply for an Employer Identification Number. These numbers are a bit like social security numbers for businesses. To apply for your Employer Identification Number, also known as an EIN, fill out and submit an SS-4 form to the Internal Revenue Service. (The IRS provides downloadable SS-4 forms on its website.)

Step Three: Make the S Corporation Election

The final step in becoming an S corporation is making the S corporation election. To complete this step, you fill out a 2553 form and submit it to the Internal Revenue Service Center in Ogden, Utah. This form tells the IRS that you want your business treated using the laws described in Subchapter S of the Internal Revenue Code.

If you feel confident with these three steps, don't hesitate to get started. If you would like more instruction than the brief steps listed above, please consider downloading one of my do-it-yourself S corporation kits. I created two S corporation kits: one kit for businesses using an LLC and another for businesses using a regular corporation as the base for their S corporation.

Kit Version 1: LLC

I personally prefer using an LLC as the base for an S corporation, and many other accountants and knowledgeable professionals agree. LLCs don't require regular board meetings and stockholders meetings, so they end up being much easier to manage. Businesses using an LLC will find this kit extremely helpful. It comes with clear, easy-to-follow instructions to guide you through the set-up process. The kit also tells you exactly where you can find all the necessary New Mexico forms, and includes completed examples of the forms so you know what yours should look like.

Kit Version 2: Corporation

Occasionally a business benefits more from using a corporation rather than an LLC. For instance, a business may need "Inc" or "Corporation" in the business name in order to gain credibility in a certain field. In that case, the business owner would want to use the corporation version of my do-it-yourself New Mexico kit. The corporation version comes with detailed steps for the entire set-up process and examples of completed forms. This kit also comes with sample corporate bylaws, which may be used by you or your attorney as a guide when crafting bylaws for your own corporation