New York City S Corporation Formation Lawyer

Starting a business can be exciting, but it can also come with many questions and decisions. You are ready to start forming your business, but what type of corporate structure best suits your needs? What tax structure is best for your entity?

When you are interested in starting an S corporation, you should meet with a New York City S corporation formation lawyer. An experienced business formation attorney at Rodriques Law can help you from concept to development in establishing your S corporation.

What is an S Corporation?

An S corporation is separate legal entity from its shareholders, and S corporation assets are separate from shareholder assets.

“S corporation” is a tax designation outlined in subchapter “S” of the Internal Revenue Code. S corporations are entities that pass income, losses, deductions, and credits to their shareholders for tax purposes. Shareholders can receive either dividend income, which is not taxed at the corporate level, or salary income, which is subject to corporate payroll taxes.

Shareholders report the flow-through of income and losses on their personal tax returns, which are assessed as taxes at the individual income tax rate. S corporations help business owners avoid the double taxation that occurs when forming a C corporation. S corporation profits are only taxed on the personal return of the individual shareholder.

The S corporation must file an information return that discloses each owner’s share to the IRS. An S corporation is a tax designation, not an entity type. The business’s founder must apply to the IRS for the company to become an S corporation. An experienced New York S corporation formation lawyer can help determine whether an S corporation designation is most advantageous for a business entity.

How to Establish an S Corporation

A business owner or incorporator must create their company as a corporation by filing articles of incorporation with the State of New York and filing Form 2553 with the IRS to receive an S corporation status.

To become an S corporation, the entity must be a domestic corporation and have only allowable shareholders that are individuals, certain trusts, and estates. S Corporations can have no more than 100 shareholders and may only have one class of stock. It is important to note that non-U.S. nationals are not eligible to be shareholders of an S corporation. Only U.S. citizens and residents can hold shares, which can be a limitation for businesses considering international investors. Some types of businesses, such as financial institutions and insurance companies, are not eligible to become an S corporation. An S corporation must continually meet these requirements to maintain its status. It is important to discuss the necessary requirements of forming an S corporation with a knowledgeable lawyer in New York City S corp attorney.

A business founder must first choose a name for the business and draft and file articles of incorporation before they can establish an S corporation in New York. The next steps are:

  • Select a registered agent, who is an individual or entity that will be responsible for receiving legal documents on the business’s behalf
  • Draft and file Articles of Incorporation and IRS Form 2553
  • Create an operating agreement and bylaws
  • Apply for an Employer Identification Number (EIN) and S corporation status with the IRS
  • Establish a board of directors to guide the business

Once the business is established, annual meetings should be held, and minutes should be recorded.

Work with a New York City S Corporation Formation Lawyer

A knowledgeable S corporation formation lawyer can help evaluate whether an S corporation is the right fit given your shareholder needs. Specific requirements must be met for a company to be taxed as an S corporation. Your business must initially qualify and continue to meet all requirements to maintain an S corporation status with the IRS. An experienced New York City S corporation formation lawyer can guide you during the initial set-up process and throughout your business to ensure you maintain corporation status and benefits of S corporation tax status for NYC businesses. With our guidance, you can focus on growing your business while we handle the legal details. Ready to form your S corporation? Contact the team at Rodriques Law to schedule a consultation.

Rodriques Law, PLLC
1460 Broadway New York, NY 10036
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