Key Takeaways

  • S corp formation documents (Articles of Incorporation) establish a corporation with the state before it can elect S corporation tax status.
  • These documents are also called a Certificate of Incorporation, Corporate Charter, or Company Constitution.
  • Filing requirements differ by state, but most require details such as corporate name, purpose, incorporators, stock structure, and registered agent.
  • After filing, businesses must also submit IRS Form 2553 to elect S corporation status.
  • Choosing the right state of incorporation can impact compliance obligations and fees. Delaware and Nevada are popular choices for nationwide businesses.
  • Incorporation provides benefits like limited liability, easier access to capital, and enhanced credibility.
  • S corps must maintain formalities such as annual shareholder and director meetings, proper recordkeeping, and reasonable salaries for shareholder-employees.

S corporation articles of incorporation are the documentation needed in order to file when forming an S-corporation with the agency that governs over corporations in your state. The information you put in the document describes your business and gives the state the necessary information required.

Other Names for Articles of Incorporation

The document used to file both C corporations and S corporations goes by the name Articles of Incorporation, and it's also called:

  • Certificate of Incorporation
  • Business Incorporation Papers
  • Corporate Charter
  • Company Constitution

What an S Corporation Is

An S Corporation is another name for a subchapter of an eligible C corporation or LLC. It's taxed as a small business. The effect of being taxed as a small business is the pass-through effect that passes the income from profits and losses directly to shareholders to be taxed as their personal income. S corporations avoid the double taxation that impacts C corporations by passing earnings through to shareholders this way. LLCs and C corporations that have up to 100 individual shareholders who are either U.S. citizens or who identify as permanent U.S. residents.

IRS Requirements for S Corp Election

Filing the articles of incorporation with your state is only the first step in creating an S corporation. To be officially recognized as an S corp for tax purposes, the business must file Form 2553 (Election by a Small Business Corporation) with the Internal Revenue Service. This form must generally be filed no later than two months and 15 days after the start of the tax year in which the S corp election is to take effect. Eligible corporations must also meet certain IRS requirements, including:

  • Having no more than 100 shareholders.
  • Issuing only one class of stock.
  • Maintaining shareholders who are U.S. citizens or permanent residents.
  • Operating as a domestic corporation.

Without Form 2553 approval, the corporation will be taxed as a C corporation even if articles of incorporation were filed.

Filing Articles of Incorporation

Each state has its own minimum requirements regarding the information you have to include when filing articles of incorporation. The minimum requirements can typically be met by filling out a form provided by the filing agency's website. While your company's Articles of Incorporation can be long and detailed, they can also be short and simple. Having the document filed with the state is more important than the length of the document. After the document is filed it becomes public record, so anyone interested can see the details of your business.

Additional S Corp Formation Documents and Steps

In addition to articles of incorporation, most states and the IRS require other S corp formation documents or steps to complete the process, such as:

  • Corporate Bylaws: Internal rules outlining how the company is governed, including shareholder rights, board responsibilities, and voting procedures.
  • Initial Report or Statement of Information: Some states require corporations to file an initial report shortly after incorporation, disclosing directors, officers, and addresses.
  • Business Licenses and Permits: Depending on industry and location, the corporation may need state or local licenses to operate legally.
  • Employer Identification Number (EIN): This federal tax ID is required for opening a corporate bank account, hiring employees, and filing taxes.
  • IRS Form 2553: As noted, this is required to elect S corp status.

Together, these documents ensure both state compliance and recognition of the S corp tax election.

Choosing a State to File Articles of Incorporation

The most common choice is for business owners to file for incorporation in their home state because it keeps the number of reports to file down. It also lets them avoid making payments to more than one state. There are times, however, when it makes sense to incorporate in a different state than your home state. For example, incorporating in a state that's especially friendly to businesses, like Delaware, is a good idea if you plan to do business on a national level.

Costs and Compliance Considerations by State

Each state sets its own filing fees, annual reporting obligations, and franchise tax requirements for corporations. For example:

  • Delaware offers strong legal protections and flexible corporate laws, but requires annual franchise tax payments.
  • Nevada provides privacy advantages, as it does not require disclosure of shareholders, but has higher ongoing fees.
  • Home states may reduce administrative burden and avoid paying registration fees in multiple states if the business operates locally.

When deciding where to incorporate, weigh the initial filing costs, annual fees, and long-term compliance obligations to ensure they align with your company’s growth plans

Information Usually Required on a Certificate of Incorporation

The information you have to include in your articles of incorporation varies by state, but there are some pieces of data that are common for most states.

  • Your chosen corporate name
  • The purpose of your business
  • The corporation's duration
  • The corporation's registered agent
  • The corporation's incorporator
  • Corporate bylaws
  • The number of authorized stock shares
  • Par value of each share
  • Whether preferred shares will be issued
  • Contact information for the corporation's directors
  • The identity of the corporation's officers
  • Indemnity information regarding the corporation's officers
  • The company's legal address

Advantages of Incorporating a Business

The articles of organization are required for incorporating a company, and there are a number of benefits that make filing for this worthwhile. Some of the benefits of incorporation include:

  • Personal asset protection: Incorporating your business separates your personal assets from the business so the company's creditors can't attack your personal assets, and legal action can't be directed at you personally.
  • Tax management: Incorporating offers you options regarding how income is taxed and how deductions may be calculated.
  • Ease of raising capital: When a corporation needs to raise capital quickly, issuing shares of stock is an option.
  • Loan appeal: Incorporating gives your business separate legal entity status, which lenders often find more appealing.
  • Credibility in the marketplace: Incorporation lends credibility to your company, and this increases consumer confidence when your products and services enter the marketplace.

Limitations and Ongoing Responsibilities of S Corps

While incorporation provides many benefits, S corporations also have limitations and ongoing responsibilities, including:

  • Ownership restrictions: Only certain types of shareholders are allowed, and the corporation cannot exceed 100 shareholders.
  • One class of stock: S corps cannot issue preferred shares, which may limit financing flexibility.
  • Formal recordkeeping: Corporations must maintain meeting minutes, adopt bylaws, and keep shareholder records current.
  • Salary requirements: Shareholders who work for the business must receive a reasonable salary subject to payroll taxes.
  • Tax reporting obligations: S corps must file an informational tax return (Form 1120-S) and issue Schedule K-1s to shareholders each year.

These responsibilities can increase administrative work, but they are critical to maintaining compliance and preserving the tax benefits of S corp status

Leadership and Meetings

Having a leadership team is a requirement for an S corporation, and that leadership must hold shareholder meetings and director's meetings. This means a record of each meeting's minutes has to be filed in the internal records the corporation maintains. When any stock is transferred or the company makes updates to its bylaws, there are formal procedures to follow regarding those changes. It's also required that any shareholder who works for your corporation also receives a salary that's an appropriate market wage for the work performed.

Frequently Asked Questions

1. What documents are needed to form an S corp?

You need Articles of Incorporation filed with the state, bylaws, an EIN, and IRS Form 2553 to elect S corp status. Some states also require initial reports or annual statements.

2. How are Articles of Incorporation different from bylaws?

Articles of Incorporation establish the corporation with the state, while bylaws are internal rules governing how the corporation operates.

3. Do all states require the same S corp formation documents?

No. Each state has its own filing requirements, fees, and reporting rules, so it’s important to check with your state’s business filing agency.

4. When must Form 2553 be filed?

Form 2553 should be filed within two months and 15 days of the start of the tax year you want S corp status to begin.

5. Can an LLC file Articles of Incorporation to become an S corp?

No. An LLC files Articles of Organization, but it can still elect S corp tax treatment by submitting IRS Form 2553 after formation.

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