What an S-Corporation is
The state forms a corporation. Whether it is taxed as a C-Corporation or an S-Corporation is decided later, with the IRS. By default a new corporation is a C-Corporation. To be taxed as an S-Corporation, the corporation files IRS Form 2553, and the IRS then treats its profits as passing through to the shareholders, who report them on their own returns.
Who can own S-Corporation stock
- The IRS limits an S-Corporation to 100 shareholders and one class of stock
- Shareholders must be allowed owners, mainly individuals who are US citizens or residents, and certain trusts and estates
- Individuals who are not US residents cannot own S-Corporation stock (IRC section 1361). If you live outside the US, founders in your position commonly use an LLC or a C-Corporation instead; ask a CPA
What Coral Filings does and does not do
We form the corporation in the state you choose, act as your registered agent (or use yours) and request your EIN. We do not file Form 2553. The owner files it with the IRS, and a CPA should advise on whether the election helps you and on the deadline. The IRS generally wants the form no later than two months and 15 days after the start of the tax year the election takes effect: confirm the exact rule with the instructions linked below and a CPA.
What it costs to form
The state fee is the same as for a C-Corporation: see corporation cost by state. Annual reports and franchise taxes are paid to the state.
Start one
Choose "S-Corporation" in the order form and we note on your order that you plan the election. Start an S-Corporation. Read LLC, C-Corp or S-Corp first if you are not sure. This is general information, not legal or tax advice.
Frequently asked questions
Can a foreigner own an S-Corporation?
An individual who is not a US resident cannot own S-Corporation stock. Foreign founders usually choose an LLC or a C-Corporation.
Do you file Form 2553 for me?
No. We form the corporation and note your plan on the order. You file Form 2553 with the IRS, ideally with a CPA.
This page is general information, not legal or tax advice. For your specific situation, talk to a licensed attorney or CPA.