If you are looking to start a business in Pennsylvania, one option to consider is forming an S corporation. An S corporation, also known as a subchapter S corporation, provides many of the same benefits as a regular corporation, but with some added tax advantages. In this article, we will outline the steps required to start an S corporation in Pennsylvania.
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Step 1: Choose a Name
The first step in starting any business is always to choose a name. Your S corporation's name must be unique and not already in use in the state of Pennsylvania. You can check the availability of your desired name using the Pennsylvania Department of State's business entity search tool.
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Once you have chosen an available name, you will need to register it with the Pennsylvania Department of State. This can be done by filling out the proper paperwork and paying a fee.
Step 2: Choose a Registered Agent
Every S corporation is required to have a registered agent. A registered agent is a person or company who is designated to receive legal documents on behalf of the corporation. The registered agent must have a physical address in the state of Pennsylvania and be available during regular business hours.
You can choose to act as your S corporation's registered agent if you have a physical address in Pennsylvania, or you can hire a third-party company to serve as your registered agent.
Step 3: File Articles of Incorporation
To officially form an S corporation in Pennsylvania, you will need to file Articles of Incorporation with the Pennsylvania Department of State. This document includes basic information about your corporation, including its name, registered agent, and business purpose.
To complete the Articles of Incorporation, you will need to provide the following information:
- The corporation's name and address
- The name and address of the registered agent
- The name and address of each incorporator
- The number and type of authorized shares of stock
You will also need to pay a filing fee when you submit your Articles of Incorporation.
Step 4: Create Corporate Bylaws
Once your S corporation is officially formed, it is important to create a set of corporate bylaws. Bylaws are the rules and guidelines for how your corporation will operate, including details about shareholder meetings, how and when officers are elected, and how profits and losses will be distributed.
It is important to have a clear set of bylaws in place to avoid disputes among shareholders and to operate the corporation in compliance with state laws.
Step 5: Obtain Necessary Business Licenses and Permits
Depending on the nature of your S corporation's business, you may need to obtain certain licenses and permits from the state of Pennsylvania or local municipalities. This could include a business license, tax registrations, zoning permits, and more.
Be sure to research the necessary licenses and permits for your specific business and apply for them as soon as possible.
Step 6: Obtain an Employer Identification Number (EIN)
An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify your S corporation for tax purposes. You will need an EIN to open a business bank account, hire employees, and file tax returns.
You can obtain an EIN online from the IRS website for free.
Step 7: Nominate S Corporation Status for Tax Purposes
Once you have obtained your EIN, you can choose to nominate S corporation status for your business for tax purposes. This will allow your corporation to pass its income, losses, deductions and credits through to shareholders, who can then report them on their individual tax returns.
To do this, you must notify the IRS of your intention to elect S corporation status by filing Form 2553.
Conclusion
Starting an S corporation in Pennsylvania requires several steps, including choosing a unique name, filing Articles of Incorporation, creating corporate bylaws, obtaining necessary licenses and permits, obtaining an EIN, and nominating S corporation status for tax purposes.
However, with these steps completed, you can enjoy the benefits of operating a corporation with some added tax advantages.
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