Do-it-yourself Vermont S Corporation Kit
Operating your venture as an S corporation can save you thousands of dollars a year in payroll and income taxes. And, somewhat surprisingly, a Vermont S corporation is actually pretty easy to set up yourself. You just have to follow three steps:
Step 1: Form an LLC or a Corporation
The limited liability company or corporation will be the foundation for your S corporation. To form an LLC fill out an Articles of Organization form, and then send the completed form along with the $100 fee, to the Secretary of State in Montpelier.
To form a traditional corporation, you fill out an Articles of Incorporation form and then send it and the $75 fee to the Secretary of State as well.
Note: Just to make this point clear, an S corporation isn't a real corporation but rather an entity that's elected to use the tax accounting rules specified in Subchapter S of the Internal Revenue Code. Both LLCs and traditional corporations may elect to use these tax accounting rules.
Step 2: Apply for an EIN
After you establish your LLC or corporation you will apply for an Employer Identification number, or EIN. An EIN is like a Social Security Number for businesses. To apply, fill out an SS-4 form and send it to the Internal Revenue Service. This form is available for free download from the IRS website. You should receive you EIN within a few weeks of sending in your application.
Step 3: Make the S Corporation Election
Once you receive your EIN from the IRS you can make the election to be treated as an S corporation. To make the election, fill out a 2553 form and submit it to the Internal Revenue Service Center in Cincinnati, Ohio. When the IRS receives your election, they will evaluate it to make sure that you followed correct procedure in making the election, and that you are eligible to make the election. Assuming you are eligible, the IRS accepts your election and then sends you a letter confirming your S corporation status.
If you feel confident completing this process on your own, get started without delay. If you would like more detailed instructions or a more in depth explanation of the benefits of S corporations, take a look at my do it-yourself kits. I created two versions: one for Vermont businesses who want to use an LLC as the base of their S corporation, and one for those who want to use a corporation as the base. You can purchase and download either version fora modest price--and note that I provide a money-back guarantee if you're not completely satisfied.
In most cases, I recommend using an LLC as the base for your S corporation because they are easier than corporations to manage. In the LLC kit, you will find an in-depth discussion of the benefits and drawbacks of forming an LLC in Vermont, as well as detailed steps to walk you through forming an LLC, applying for an EIN and making the S corporation election. The kit also includes two sets of sample LLC operating agreements, which you can use for reference when creating your own LLC operating agreements.Purchase and Download
Occasionally using a corporation to create an S corporation will benefit a business more than using an LLC would. For example, a business may gain more credibility in its field by having "corporation" or "Inc" in its name. The corporation version of my do-it-yourself S corporation kit is perfect for business owners in that situation. The kit explains the benefits and drawbacks of incorporating in Vermont and how to balance them. The kit provides step-by-step instructions explaining how to incorporate your business, apply for an EIN and make the S corporation election. Additionally, the kit includes a set of sample corporate bylaws, which can be used by you or your attorney as a template when creating your own corporate bylaws.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