Do-It-Yourself South Dakota S Corporation Kit
The taxes stemming from the Patient Protection and Affordable Care Act and the expiration of the Bush Tax cuts mean that South Dakota business owners face a sharp rise in taxes beginning in 2013. Fortunately, S corporations can help counteract this, and can help keep your taxes down. How? S corporations can reduce the amount of payroll and income taxes a business owner pays by hundreds or thousands of dollars a year. They are also quite easy to set up--you just have to follow three simple steps.
Step One: Form an LLC or Corporation
The LLC or corporation will serve as the base for your S corporation. I personally recommend using an LLC because they are easier to manage. Fill out an Articles of Organization form to form an LLC, or an Articles of Incorporation form to form a corporation. Send your completed form to the Secretary of State in Pierre along with $150 for the filing fee.
Note: Yes, you just did read right. You can use either an LLC or a traditional corporation as the base for an S corporation.
Step Two: Apply for an EIN
You will next need to apply for an Employer Identification Number, or EIN. EINs are like Social Security Numbers for businesses. To apply, complete an SS-4 form and submit it to the Internal Revenue Service. The IRS provides a downloadable version of the SS-4 form on its website. You should receive your EIN about a month or so after you submit your SS-4 form.
Step Three: Make the Subchapter S Election
Once you receive your EIN from the IRS, you can make the Subchapter S Election. To do this, download and complete a 2553 form, which you can find on the IRS website. This form tells the IRS that you want your business to be treated using the tax accounting conventions from Subchapter S of the Internal Revenue Code. (This is where the "S" in "S corporation" comes from.) Send your completed from to the Internal Revenue Service Center in Ogden, Utah.
Ideally these steps give you enough information to form an S corporation on your own. If, however, you think you would benefit from some additional coaching, consider purchasing and downloading one of my do-it-yourself kits. I created two versions: one explains how to form an S corporation using an LLC as your base, and the other explains how to form an S corporation using a regular corporation as your base.
LLC Do-It-Yourself Kit
As I mentioned earlier, I highly recommend using an LLC as the base for your S corporation. LLCs are generally much easier to manage than corporations because LLCs don't require regular board meetings or annual stockholder's meetings. This kit gives clear instructions to guide you through all three steps, and it comes with examples of completed forms for reference. I provide tips for accelerating the process. And I also include two sample LLC operating agreements, which you can use as a guide when creating your own operating agreement. One operating agreement is for single member LLCs and the other is for multiple member LLCs.Purchase and Download
Corporation Do-It-Yourself Kit
I also sell a corporation version of my do-it-yourself S corporation kit. Like the LLC kit, this kit comes with detailed, easy-to-follow instructions and examples of completed forms as well as tips and tricks for expediting the process of setting up an S corporation The kit also analyzes the benefits and drawbacks of incorporating in South Dakota, and talks about how to balance them. As a bonus I include a set of corporate bylaws, which may be used by you or your attorney as a template when you create 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