New York S Corporation Election: Everything You Need to Know
A business achieves New York S corporation election by going through the election process with the state as well as the federal S corp election process.3 min read
A business achieves New York S corporation election by going through the election process with the state as well as the federal S corp election process. Federal approval of an S corporation does not guarantee the ability to operate as an S corporation in the state of New York. To officially be designated as an S corporation in New York, your business will be required to file a Form CT-6, which is the Election by a Federal S Corporation to be Treated as a New York S Corporation.
Along with the form, you will need to include your filing fee as well as your federal approval letter. After obtaining approval from the New York State Tax Department, the business will then need to file a Form CT-3-S to begin operating as an S corporation in the state of New York.
What Is an S Corporation?
An S corporation is a special tax treatment that a business may elect if they meet the eligibility requirements set forth by the state. An S corporation is a hybrid tax entity that combines the structures and benefits of C corporations and partnerships.
How to Form a Corporation in New York
There are multiple steps that must be completed before a business will be considered to be a corporation in the state of New York. The steps required to become a corporation in New York include:
- Choose your corporation's name. Your name will be required to include indicators that it is a corporation, such as "Incorporated," or "Limited." The name you choose must be recognizably different than any other company name registered in the state. You can search for name availability and reserve your name at the New York Department of State Division of Corporationswebpage.
- Create and file your company's Certificate of Incorporation. You must create and file this document with the New York Secretary of State, and it must include your company name, the country and address of the office location, the number of shares it is authorized to distribute, and the name and address of the incorporator.
- Appoint your corporation's registered agent. In the state of New York, you must name a registered agent who will receive legal paperwork on behalf of your company. The agent must be allowed to do business in the state of New York and must maintain a physical address.
- Create a corporate record book. You will want to set up a filing system to maintain all of your important corporate records in one place, such as minutes of meetings and stock certificate stubs.
- Create your corporate bylaws.Your bylaws will be the internal document detailing the rules your company will abide by. Though these are not required by the state, they are normally used to establish operating procedures and show the corporation's legitimacy.
- Appoint your board of directors.The incorporator of the business will need to appoint an initial board of directors who will serve until the first annual board meeting, where directors will be elected. Once assigned, the incorporator will have to fill out an "incorporator's statement" that will list the names and addresses of all of the directors.
- Hold a board of directors meeting. You will need to hold a first board meeting to appoint officers, adopt your bylaws, select your bank, authorize the issuing of stock, set up the corporate fiscal year, adopt a stock certificate, and create a corporate seal. It is essential to record the minutes of these meetings.
- Issue stock to your shareholders.Even though you are not required to issue physical stock certificates in the state, this is often practiced by small corporations. You will need to enter the stockholder's name and contact information in the stock transfer ledger.
- Set up for compliance with the New York Biennial Statement Requirements.Every other year, your business will be required to file this statement along with a filing fee.
- Obtain an Employer Identification Number.You will need to obtain an EIN from the IRS to serve as your business identification.
- Make your S corporation election, if desired. If your shareholders vote to have your company designated as an S corporation with the IRS, you will need to complete and file From 2553, Election by a Small Business Corporation.
- Set up for New York state taxes.In New York, corporations are required to file franchise tax reports and pay franchise tax fees annually to the state.
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