How do I establish that my corporation is an S corporation?
Well, in order to make your corporation an S corporation, (and just as a reminder, every corporation, when you first organize it and start it up, is a C corporation - in other words, profits that are made at the corporate level are taxed and then any dividends that are distributed to shareholders are then taxed personally to them) the first thing you have to do is figure out if you qualify. So number one, you need to take a look and find out, is this within 90 days of when I formed the corporation, or within 90 days of the next fiscal year (of the next tax year, so usually by the end of March of every year that you would have to pay taxes). So if you're eligible to file it, then what you would do is you would take form 2553 of the IRS, which is the S corp election, and you would have that filled out, you can do that yourself off the IRS website and there are companies like Legalzoom.com online where you can get, where you can have them fill those out for you, and then you would basically put down that information and file it. Now in order to be eligible, other than the time frame, you would need to make sure that you meet the minimum requirements of having less than 100 shareholders, that your corporate fiscal year ends on December 31st, that all of your shareholders are natural persons, that are United States citizens, and lastly that you have no class of preferred stock, that you only have one class of stock. If you do all of those, then your corporation, even if you file the 2553 on, you know, February 4th, the entire tax year will be treated as an S corporation.
