Do-it-yourself North Carolina S Corporation Kit
The upcoming taxes stemming from the Patient Protection and Affordable Care Act (commonly known as Obamacare) and the end of the Bush Tax cuts mean that some North Carolina business owners face a dramatic increase in taxes in the coming years. Fortunately, you can at least partially protect yourself and your business from paying too much in taxes by forming an S corporation. S corporations can save a business owner hundreds or thousands of dollars in payroll and income taxes a year. And, what's more, they're actually pretty easy to set up. To form an S corporation, you just need to follow three simple steps.
Step 1: Establish an LLC or Corporation
First, you need to set up the base for your S corporation. Both limited liability companies and regular corporations work well as the base for an S corporation. Fill out either an Articles of Organization for an LLC or an Articles of Incorporation for a corporation to create this base. Send the completed form and $125 for the filing fee to the Secretary of State's office in Raleigh.
Step 2: Apply for an EIN
The next step is applying for an Employer Identification Number, or EIN. These numbers are like Social Security Numbers for businesses. To get your ID number, fill out an SS-4 form and send it to the Internal Revenue Service. The IRS provides downloadable versions of this form on its website. You should receive your EIN in about a month, and you will need it to complete the next step.
Step 3: Making the Subchapter S Election
Once you've received your EIN, you can make the election to be treated as an S corporation. Fill out a 2553 form and submit it to the Internal Revenue Service Center in Cincinnati, Ohio. This form tells the IRS that you wish to be treated using the laws in Subchapter S of the Internal Revenue Code. The IRS then checks that you are eligible to make the election and that you followed correct procedure before you receive S corporation status.
If you would like a more coaching than what I provided in the brief steps listed above or need the governing documents (like by-laws or operating agreements), you might consider purchasing downloading one of my affordable, do-it-yourself S corporation kits. I created two kits in downloadable e-book form: one for North Carolina businesses using an LLC and another for businesses using a corporation.
DIY Kit For North Carolina Businesses Using an LLC as Platform:
In most cases, a business benefits more if it uses a limited liability company rather than a corporation. The owners of those businesses would then want to purchase the LLC version of my do-it-yourself kit. This kit comes with a complete set of instructions and examples of completed forms so you know what your forms should look like. It also has two sets of sample LLC operating agreements. One set is for single member (or single owner) LLCs and the other set it for multiple member (or multiple owner) LLCs.Purchase and Download
DIY Kit For North Carolina Businesses Using a Corporation as Platform:
I also provide a kit for businesses who wish to use a regular corporation as the base for their S corporation. This kit includes a complete set of instructions and sample completed documents for reference. It also includes a set of sample corporate bylaws. You or your attorney can use these bylaws as a guide when creating bylaws for your new corporation.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