Thanks so much for the video. You’re the best! I created my corporation playing back the video as I went along. The most entertaining part of video is when you state at 8:35 that the state is 4 days behind reviewing applications. You pause and then say which is great! Awesome work Elizabeth!
I think that was the most thorough video I've ever watched, you crushed! I can't say thank you enough, that was perfect. I feel like I can actually do this on my own now. Much thanks.
I love this video I like how you explain it all!!! And actually do it step by step!!!! Pls keep your videos!!!! And keep explaining step by step like if we are 6 year old!
Thank you very much for your contributions, love all of your videos! BTW, this is my very first comment on TH-cam , so appreciate what you have done for your audiences, take care and keep going !
Thanks, great podcast, I followed it and created s corp, already received 2 spam letters that need to pay 90$ for getting a certificate of status and 125 $ to get a poster for a Labor law compliance notice. It would be great if you will have some podcast about not falling into scams.
Oh yes good idea -- that spam drives me nuts! There are very misleading and should be illegal. The worst is when someone files a trademark -- they send "invoices" for $1400+ for "your international registration" which doesn't exist but people get so confused!
This video was extremely helpful and easy to follow. I will have to wait until weekday for IRS sites hours of operation to file my EIN Other than that, I filed my application for a corporation with no problems. Thank you!
Hi Elizabeth, thank you for making the steps so clear! I am a real estate agent in San Francisco and have heard other agents setting up S-Corps directly, instead of a corporation first, and then filing the form 2553 to create an S-Corp. Is it possible to form an S-Corp directly? Or are the other agents misinformed about what their accountants did? Also, is there a benefit to forming a corporation vs an LLC prior to electing an S-Corp? Many thanks in advance!
@@ElizabethPW That's what I figured. Is there a benefit to forming a Corporation vs an LLC if I'm the only owner? One of your videos mentioned that an LLC may be easiest for an individual as a corporation needs to hold an Annual Directors and shareholder meeting and have minutes, etc... My out-of-state accountant said real estate agents need to be set up as a corporation, but I'm not sure that's true in California since I'm only a salesperson, not a brokerage. Also, one of your videos mentioned the name on my corporation should be used on my business cards, but I work for eXp brokerage, and don't have my corporation name on my business cards as I haven't set myself up as a DBA. Should I have just used my name to set up my corporation? This is a bit complicated - which is why I just was a Sole Proprietor for 18 years. My head is spinning with this whole process... Thanks in advance!
Right sounds like if a real estate business is a brokerage, they have to be a corporation because they can be a "corporate brokerage." www.dre.ca.gov/files/pdf/forms/re218.pdf Generally the reason people form corporations instead of LLCs is because they are required to or because they are just more familiar with it. Not sure if when you have clients, if they are doing business with the brokerage or with you (as a subcontractor of the brokerage) so that would effect what goes on business cards.
You can file the DBAs as soon as the corporation is formed. They are filed with the County, or you can use a system like dbastore.com to make it easier
This is a great walkthrough! I have a question though as a sole proprietor film worker looking to switch to a loan out. Is there a difference between filing as a C Corp or LLC, before electing S corp?
I initially formed an LLC and need to change it to a corporation. I haven't done anything with the LLC yet (no bank account/no payroll) and was wondering if I should just dissolve my LLC and form a corporation with the same name or if I should pay for the $150 fee to file form CONV LLC-GS to change the entity. If I went the dissolve route, would that have any adverse side effects? Thank you so much and sorry this is so much to ask of you.
If you filed the LLC recently (this calendar year), then I'd just dissolve it and form a new corporation -- much more simple and fast. The problems are if you used it in any way, and it sounds like you did not.
This is so helpful and easy to follow! Thank you!! This seems fairly simple to do myself. My tax guy charged $1,000 to set this up for us. Is there another thing I am missing? Are there more steps after this that he would complete for us that makes sense to pay that steep fee? Also another side question. other than the $100 registration and $800/year, what other fees are associated with an S-corp? Set up or annually. Thank you so much!!!!
Well no idea what they are including in their $1K package, but they may be including other documents like bylaws, corporate minutes, stockholder agreements, etc. and they may also do other filings like SOI, tax election, business license, etc. What fees are required does depend on the business, the main other ones that apply in most situations are business licenses / permits, and paying someone to do the tax returns.
Hi, thank you for this video. Perfectly explained and easy to follow through. I do have a question. Once I make my LLC into an S Corp using form 2553 and send it to the IRS, Do I also need to do inform the state of California that I will be converting to an S corp?
Good question -- in California, you don't have to file anything special to elect to be an S Corp -- they rely on the federal form. (note for anyone else reading this -- in some states you do have to file an s corp election with the state)
Thank you for this video. We filed a Partnership last year with Northwest RA. So, now just finding out we need an SCorp for even better tax benefits. We also use 1800Accountant. I was just searching out how to file it ourselves to save a little money. This is helpful.
Thank you for the informative video! I have a couple questions: 1. What is the difference between bizfile and incfile and which one saves more money and time? 2. To create an S corp, which one would you recommend using?
Bizfile is a government website where you file your own LLC/corp. Incfile is a third party company you hire to do it for you. Depends if you want to do it yourself or hire out! If you want to hire, I’d recommend Northwest or Doola.
Hi, first off I want to start thank you so so so much for this video. I have followed all these steps and have been officially approved after filing to form corporation. I just want to make sure, my next step is to file and hopefully get the EIN number online and then complete the form on IRS to make it an S corporation?
You'd file a personal state and federal tax return, and a business state and tax return. If you want details about taxes, I recommend speaking to a tax person (I'm an attorney, not a tax preparer)
Thank you so much for your formation, I Owen business men’s suit store for 14 years i’ve been sole proprietorship now it’s the time to switch to S Corp. please I need some advice. Thank you so much for your help
Do you have any specific questions about converting your business from a sole prop to an S Corp? Also you can check out the Discord as a place to ask questions: discord.gg/Sz95qBTE
@@ElizabethPW Hi Elizabeth, we are in the process of doing the same thing. Have been a sole prop and want to go s-corp. Nervous to do it ourselves, but not sure where to turn. Our tax accountant does not do that. Any suggestions, or do you think we can form the LLC and S-corp on our own? Thank you so much.
Hi Elizabeth, I am just barely starting an S corporation. This video was done a year ago, so hopefully nothing changed. I am a pharmacist so I starting a consultation using an s corporation. Are we subject by laws of limitations by the board of pharmacy when setting up an s corporation ?. Hopefully you can answer me. More power to your channel !!
To make sure we are on the same page, a pharmacist business needs to be a "professional corporation" in California, but that professional corporation can be taxed as an S Corp. Here's a vid I did on prof corps in CA th-cam.com/video/83GLSE0j_ng/w-d-xo.html and then you just follow the S Corp video directions on how to get the S Corp election with the IRS.
So I have an LLC and am looking to switch to S Corp. I already have an EIN - do I need a new one when I switch over? Thanks in advance! Your video is perfect! Clearly explained and easy to follow!
If you are electing the LLC to be treated as an S Corp for tax purposes, then same EIN. If you are converting the LLC to an S Corp, then usually the same EIN. But if you are using a merger process to change the business from being owned by an LLC to being owned by an S Corp, then a new EIN.
Hi Elizabeth. This video was very helpful! I have a quick question: After filing the articles of incorporation online in CA, do I need to wait for them to be approved before filing for a EIN? I ask because I am planning to have my filing date be January 1st and I would like to get the ball rolling now, in December, as much as I can to hit the ground running starting in January (I'm converting my solo prop to an S Corp). I assume I would need to wait until my articles of incorporation have been approved before applying for the EIN, but I wanted to double check. Thank you!
In the past I have got the EIN on something listed as "Pending Future File Date" in December, knowing that if something gets messed up with the corp/llc (typically is just the name needs to be changed a bit) then I'll just fix it with the IRS also.
Elizabeth, great video. Thank you! Quick question: For independents contractors , working from home (fully remote), services offered to businesses elsewhere but residing in CA, would you recommend that that file S-Corp in California or alternate states like Delaware, Wyoming , Nevada etc. Are there pros and cons that should influence decision-making?
I don't know of a reason a day trader could not have a corporation or have their LLC taxed as an S Corp, as long as the owners are eligible to be owners of an S Corp (must be citizens or permanent residents).
Is there another video where you talk about the next steps after your S corp is formed? Ie how to create bylaws, minutes, get a business license, etc.?
Do I also need to apply for a CA SEIN to run payroll? I have a single person Professional Corp elected to be taxed as an SCorp. I'm going to only pay myself (through a mix of W2 salary and distributions)
Awesome video! If you are just starting out do you need to start with a S corp? I am doing a business part time and of course want to grow it big and go full time but can I do it later after I grow? Nd also since we are early in the year it may make sense to do it January 1st 2024 like you said. Thank so much in advance
It can be a great plan to start out as a sole proprietorship or even an LLC taxed as a sole prop, to keep it more simple / less expensive, and then change it later to be an s corp when it makes financial sense. Just make sure to get insurance and have written contracts.
Once you have your s-corp, do you file for a DBA also or run your business off of the s-corp name? Also, have you worked with insurance agents in setting up s-corp? Business entity?
@@ElizabethPW I found with California Department of insurance that if you decide to have a corporation, you must file a business entity license with your corporation, and then have the California Department of insurance request you to submit five fictitious names, and they will approve one of them. After that, you must attest that you will use the approved DBA on all marketing materials dealing with insurance within the state of California. It has been a lot of work.
Thanks for this video. Just filed with the state but realized I may have acted too quickly. I have a psychotherapy practice. Should I have filled with the state differently, ie. professional? I didn't see this designation. Thanks.
Licensed professionals can't operate under an LLC for their practice in CA -- typically they form a "professional corporation" instead Probably the easiest way to fix is to cancel the current LLC or Corp asap ("short form cancellation certificate" for LLCs) and form a professional corp.
@@ElizabethPW Thanks. I didn't form an LLC. Just a regular CORP the way you showed in the video. Was there a special place on the sos.ca.gov that designated "professional" corp? I didn't see it. Should I still cancel the corp I filled?
Hi Elizabeth, thanks for the detail walkthrough of forming a corporation. I am looking to register a bookkeeping business. I have a CPA but since the business services do not need me to be licensed, I only want the business as a simple LLC to avoid register it as a SCorp with all tax implications, it it possible?
Right my understanding is that if you open up a business where those services are not licensed, then no you wouldn't need to be a professional corporation -- it is only if you provide CPA services, things where you need the license.
Thanks so much for this video! It helped a lot. I just registered an LLC (unfortunately they said it would be ready on Jan 9th but it came though in December). I really just want an S-Corp so that I can employ myself and issue myself W-2's. I'm wondering if I should cancel that LLC and start over as a corporation. Would there be any issue getting the same business name if I refiled as a corporation now that I have an LLC with the correct name?
@@ElizabethPW yeah I could do that. I don't get the free year though. They registered the LLC on the 22nd of December 😂 - maybe it's not worth the risk of trying to save the extra $800 and registering a corp now in January instead.
Right it does mess up the free year. If you dissolve it ASAP (before Jan 15th) then the LLC wouldn't owe $800 for this year either (because tax year is less than 15 days and it didn't engage in business). Then you can start over with the new corporation.
@@ElizabethPW Thanks so much! Will do. I was using ZenBusiness to do everything. They used to be great but they have really been messing me around so much recently. I think I'll try do this directly with the Secretary of State this time. Thanks again for the video!
So if you want for the biz to be treated as an S Corp for *this* tax year, you have to elect within two months and 15 days of the start of this tax year. If you want the biz to be treated as an S Corp for *last* tax year, then you are filing a late election, which is possible (and many file it with their S Corp tax return) but you must meet the rules for the late election www.irs.gov/businesses/small-businesses-self-employed/late-election-relief
hello, first of all, thank you for your great videos! they are very helpful! may I please know if there is any time limit when initial authorized shares need to be paid up by the shareholder who created the corporation? is this time limit differs between S Corp and C Corp? Thank you!
Until the shareholder pays for the shares, the shares would not be issued and there would not be any owners. This could be okay for a short while but if the corporate formalities are not observed in this way, it would create problems later (the corporate veil could be pierced). Also, you would not be able to be an S Corp because the shareholders have to sign the S Corp election form.
Can my new Corporation function as an open(up and running) business before I receive the Form 2553 approval from the IRS? My business has been registered by Ca in October and I plan to open my doors on 1/1/2022. (I sent in my 2553 in October and IRS informed me it would take another 4 months before approval, so sometime in March2022)
It will be back-dated to this year, if it is accepted. I've only seen rejections when the form is filled out incorrectly / is missing something, or if the biz not eligible to be an S Corp (like if owned by a non-citizen/resident). If it is something fixable, you can ask for relief for a late election (check out www.irs.gov/instructions/i2553) to fix it.
In regards to filing form 2553 in a community property state (California), does the other spouse have to be listed as a consenting spouse regardless if he/she actually has any % ownership/shares...aka solely owned by one spouse with no one else on any of the incorporating paperwork.
Hm my understanding is that for the IRS form 2553 it is just the spouse(s) that have ownership shares - the IRS doesn't care much about it. It is more of a state law thing where the spouse can challenge shares being sold or altered without consent (typically when sold for less than fair market value or given as a gift). Spousal consent tends to be overdone but it would be good to have "spousal consent" in writing just in case, since not really hard.
Hi Elizabeth, I am currently looking into obtaining my c-10 (electrical) contractors license. My application is asking for me to identify my business entity. I am leaning more towards filing for an s-corp in the future. If i were to identify as a sole ownership now, could that complicate things for me down the road when reassigning my entity? Thank you for your help 🙏
Hi! If I just filed for my business now am I still exempt from tax year? I did the form for general stock and it’s still pending review bc I literally just did a few minutes ago. And I know that after they confirm it’s all good I have to follow your next steps to actually make it an S corp. my question is, once I do that am I exempt from the $800 or would I still have to pay for my first year. Also my filing fee was only $5 but you keep saying $105, has something changed? Because I saw the website is different now as well. Thank you!!
The exempt first year thing is still in place as of now (feb 2023). Yep they have current waived the filing fee so it is lower right now (it will go back to the regular fee later this year I think)
Hi just saw your video very helpful, I am starting to process for S corp once I file and pay fees will I get a binder for the laws and minutes , etc...
Here's a book I recommend to use to create your corporate records - www.amazon.com/Corporate-Records-Handbook-Meetings-Resolutions/dp/1413326455 Nolo Publication's "Corporate Records Handbook, The: Meetings, Minutes & Resolutions"
I Have a question; i am wanting to do both, elect my LLC to be a s corporation, as well as change the name. Can this be done at the same time? if so, how exactly? Thank you so much, and your videos are incredibly helpful!
If you want to elect for your LLC to be taxed as an S Corp, you do that with the IRS th-cam.com/video/-CXGILTIGmI/w-d-xo.html . To change the name of the LLC, you do that with the state (you "amend" the LLC) th-cam.com/video/6Z_X1dTTdU4/w-d-xo.html .
Hi, should I file for an S corp before I apply for my license or after I apply for my contractors license? Also, should I get a Professional Corp or a general stock corp is fine?
If you want the contractor license to be the corporation, then yes you form the corporation first. A contractor biz can be a general stock (there's a special rule)
Hi Elizabeth, Awesome video. I currently have a Sole Proprietorship and am looking to form an S-Corp. I already have an EIN number for the business license that I have so that I can open a business bank account. When I do an S-Corp, will I need a new EIN#? Would I need to setup a new bank account or can I use my current one?
Usually when people talk about a TIN they are talking about a ITIN (individual tax id number). But an EIN is a type of tax id number (TIN) so if you have an EIN for your corporation, you're set.
Just got approved by the Secretary of State of CA as a professional corporation (one-person business). Filed my Articles of Incorporation and Statement of Information with California and it was approved. Just finished my Bylaws, Minutes, and Issued myself Stock Certificate. After I Get EIN from the IRS with S-Corp Election and File Form 2533 with the IRS, is there anything else I need to do?
I am and newbe, planning to get into an offer from a dentist house that has S Corp formed. They are asking me to form a S corp as well and get paid and then pay them percentage to be part of their set up. Question 1. Should I ask how many shares their S Corp has? Should I just have an S Corp and do Corp to Corp payment?
Hi Elizabeth, thank you so much for such an informative video! I have a question about utilizing a coworking space (for example) as business address if I'd be working from home. Is this something I have to be renting out or could I simply find a coworking space near me and put that address down?
Usually you want the minimum price (par value) to be really small. Here's an article about it www.nolo.com/legal-encyclopedia/what-is-par-value-stock.html
Hi Elizabeth! if we put lets say 10000 shares on the corporation filing form, doesn’t that conflict with the IRS form 2553 where it says “have no more than 100 shareholders”?
I bet that it is common - if you fill out the part of the form asking for "late election relief" and meet the requirements of that correctly, then you shouldn't have to pay a penalty.
Hi. I have created an S-Corp last year in September. Since then my business is inactive I haven’t even got my EIN number yet. My question is do I still need to pay any fee to FTB? Or file any tax return ?
If you created a corporation, even if you don't use it, California still wants a tax return filed even if it is with all zeros. But under the law as of right now, they are waiving the $800 minimum franchise fee tax for the first calendar year -- you'd want to file to take advantage of that for tax year 2022. Also -- if you don't have an EIN then you also may have a C Corp, not an S Corp -- to have an S Corp you have to file an election with the IRS (and I'd think you would have got the EIN if you did the S Corp election, so I wonder if you have not done that yet).
Thank you for the video. When I file for a corporation, following the instructions in the 1st half your video, does it automatically handle Minutes Meeting, Bylaws, etc.? And how do you link your Business Bank Account to your recently opened Corporation?
No you need to do the minutes/bylaws/etc yourself. I recommend this book / set of templates from Nolo store.nolo.com/products/the-corporate-records-handbook-cormi.html - and for your business bank account, you'd need to set up a corporate bank account using the corporation name & EIN.
UPDATE: tutorial for the NEW Bizfile system: th-cam.com/video/k0iFROWBK1U/w-d-xo.html
This video saved me $800 because I was about to form a corporation in California in mid-December and now I’m going to wait to form until Jan 1st.
Great to hear!!
I lost $800 for not watching this video before opening my corp :(
So helpful! As a noob this gave the confidence that I was doing it right. Your examples helped. I caught myself in a couple mistakes! Thank you!
Great to hear!
Thanks so much for the video. You’re the best! I created my corporation playing back the video as I went along. The most entertaining part of video is when you state at 8:35 that the state is 4 days behind reviewing applications. You pause and then say which is great! Awesome work Elizabeth!
Lol :) and glad it was helpful!
I think that was the most thorough video I've ever watched, you crushed! I can't say thank you enough, that was perfect. I feel like I can actually do this on my own now. Much thanks.
Great to hear!
I love this video I like how you explain it all!!! And actually do it step by step!!!! Pls keep your videos!!!! And keep explaining step by step like if we are 6 year old!
glad it was helpful!
Thank you so much Ms. Elizabeth. I just formed my S corp thanks to your video. Bless your heart madam.
Great to hear!
Best video I found on starting a corporation, I really appreciate your work. liked and subscribed. 👍
Great to hear!
Thank you very much for your contributions, love all of your videos! BTW, this is my very first comment on TH-cam , so appreciate what you have done for your audiences, take care and keep going !
Thanks, great to hear!
Thanks for this step-by-step helpful information!
Looking forward to watch new updated video next week. Thank you.
Just posted it :)
Thank you you are such a great person for Sharing all of this and taking the time to do it.
You are so welcome
Thank you so much, you provide very clear steps without any extra crazy nosy like what some other may have.
Welcome!
This was a super helpful video, Elizabeth....thank you!
You are so welcome!
Thank you so much, Elizabeth, your video on forming an S Corp is very informative and helpful. THANK YOU.
Glad it was helpful!
Thank you, this was super helpful! I love the way you explained everything and emphasized on most important things!
Glad it was helpful!
How to get us dot number and tax is number and MC number and CA number
You are very good at teaching. This was super helpful. thank you.
Glad it was helpful!
So helpful! Thank you. Saved me from a few headaches!
Glad it helped!
Hi, Elizabeth, your video is very helpful. now I have an idea which one to do first. Thank you very much.
I'm glad it was helpful!
So helpful info thanks so much for you time
Thank you for being so informative!
Thanks, great podcast, I followed it and created s corp, already received 2 spam letters that need to pay 90$ for getting a certificate of status and 125 $ to get a poster for a Labor law compliance notice. It would be great if you will have some podcast about not falling into scams.
Oh yes good idea -- that spam drives me nuts! There are very misleading and should be illegal. The worst is when someone files a trademark -- they send "invoices" for $1400+ for "your international registration" which doesn't exist but people get so confused!
Your video was SOOOO helpful...THANK YOU!!!
Your video was so helpful and easy to understand. Thank you!
Glad it was helpful!
This video was extremely helpful and easy to follow. I will have to wait until weekday for IRS sites hours of operation to file my EIN Other than that, I filed my application for a corporation with no problems. Thank you!
You’re welcome! Yep that weekday-only thing is weird :)
Thank you very much for sharing this great information!
This was a huge help! Thanks!!
Glad it helped! You're welcome
Hi Elizabeth, thank you for making the steps so clear! I am a real estate agent in San Francisco and have heard other agents setting up S-Corps directly, instead of a corporation first, and then filing the form 2553 to create an S-Corp. Is it possible to form an S-Corp directly? Or are the other agents misinformed about what their accountants did? Also, is there a benefit to forming a corporation vs an LLC prior to electing an S-Corp? Many thanks in advance!
They don't understand what was done. You set up a corporation or an LLC, and then elect to have it taxed as an S Corp.
@@ElizabethPW That's what I figured. Is there a benefit to forming a Corporation vs an LLC if I'm the only owner? One of your videos mentioned that an LLC may be easiest for an individual as a corporation needs to hold an Annual Directors and shareholder meeting and have minutes, etc... My out-of-state accountant said real estate agents need to be set up as a corporation, but I'm not sure that's true in California since I'm only a salesperson, not a brokerage. Also, one of your videos mentioned the name on my corporation should be used on my business cards, but I work for eXp brokerage, and don't have my corporation name on my business cards as I haven't set myself up as a DBA. Should I have just used my name to set up my corporation? This is a bit complicated - which is why I just was a Sole Proprietor for 18 years. My head is spinning with this whole process... Thanks in advance!
Right sounds like if a real estate business is a brokerage, they have to be a corporation because they can be a "corporate brokerage." www.dre.ca.gov/files/pdf/forms/re218.pdf Generally the reason people form corporations instead of LLCs is because they are required to or because they are just more familiar with it. Not sure if when you have clients, if they are doing business with the brokerage or with you (as a subcontractor of the brokerage) so that would effect what goes on business cards.
Great video, do you have another video for the rest of the S corp formation steps?
check out this playlist th-cam.com/play/PLd0wcIHXfOTevNzacwRLCICRt8Mer8_T6.html
This was so helpful! Thank you so much!
Glad it was helpful!
Thank you. Very informative. I understand when to file form 2553. When do I file my 2 dba.s with my corporation & what form do I use ?
You can file the DBAs as soon as the corporation is formed. They are filed with the County, or you can use a system like dbastore.com to make it easier
Thanks for the video! How do I form a professional corporation?
here you go th-cam.com/video/83GLSE0j_ng/w-d-xo.html
You are amazing. Please share more info about how to file sales tax and payroll tax, multi-state home filing, TIA!
great ideas, thanks!
Such an easy to follow video, thank you so much!
Glad it was helpful!
Thank you, very helpful information
Great Job. Thanks
Welcome!
can you make a video for issuing shares, bylaws, and other things following the formation of the scorp?
Thanks for the idea!!
Thank you thank you thank you 🙏
Welcome 😊
This is a great walkthrough! I have a question though as a sole proprietor film worker looking to switch to a loan out. Is there a difference between filing as a C Corp or LLC, before electing S corp?
If you have a Corp taxed as an S Corp or an LLC taxed as an S Corp, for both you file the same S Corp form. A C Corp though is totally different.
Great video! Thank you Elizabeth.
You are so welcome!
I initially formed an LLC and need to change it to a corporation. I haven't done anything with the LLC yet (no bank account/no payroll) and was wondering if I should just dissolve my LLC and form a corporation with the same name or if I should pay for the $150 fee to file form CONV LLC-GS to change the entity. If I went the dissolve route, would that have any adverse side effects? Thank you so much and sorry this is so much to ask of you.
If you filed the LLC recently (this calendar year), then I'd just dissolve it and form a new corporation -- much more simple and fast. The problems are if you used it in any way, and it sounds like you did not.
@@ElizabethPW Thank you so much for the information. I really appreciate you getting back to me. Your videos are so helpful.
ELIZABETH!!! Thank you! But do you have another video for a professional corporation? THANK YOU!!!
Yep!
This is so helpful and easy to follow! Thank you!! This seems fairly simple to do myself. My tax guy charged $1,000 to set this up for us. Is there another thing I am missing? Are there more steps after this that he would complete for us that makes sense to pay that steep fee? Also another side question. other than the $100 registration and $800/year, what other fees are associated with an S-corp? Set up or annually. Thank you so much!!!!
Well no idea what they are including in their $1K package, but they may be including other documents like bylaws, corporate minutes, stockholder agreements, etc. and they may also do other filings like SOI, tax election, business license, etc. What fees are required does depend on the business, the main other ones that apply in most situations are business licenses / permits, and paying someone to do the tax returns.
@@ElizabethPW Thank you so much for your reply!!!!
Hi, thank you for this video. Perfectly explained and easy to follow through. I do have a question. Once I make my LLC into an S Corp using form 2553 and send it to the IRS, Do I also need to do inform the state of California that I will be converting to an S corp?
Good question -- in California, you don't have to file anything special to elect to be an S Corp -- they rely on the federal form.
(note for anyone else reading this -- in some states you do have to file an s corp election with the state)
@@ElizabethPW Perfect. If you don’t mind, can I send you a private message.
Thank you for this video. We filed a Partnership last year with Northwest RA. So, now just finding out we need an SCorp for even better tax benefits. We also use 1800Accountant. I was just searching out how to file it ourselves to save a little money. This is helpful.
Welcome!
Super helpful!!!
Great to hear!
Thank you for the informative video!
I have a couple questions:
1. What is the difference between bizfile and incfile and which one saves more money and time?
2. To create an S corp, which one would you recommend using?
Bizfile is a government website where you file your own LLC/corp. Incfile is a third party company you hire to do it for you.
Depends if you want to do it yourself or hire out! If you want to hire, I’d recommend Northwest or Doola.
@@ElizabethPW Thank you!
Hi, first off I want to start thank you so so so much for this video. I have followed all these steps and have been officially approved after filing to form corporation. I just want to make sure, my next step is to file and hopefully get the EIN number online and then complete the form on IRS to make it an S corporation?
Great progress! Yep get your EIN online, and then do the IRS pdf form to have it be an S Corp.
Can you please share exactly what forms to file when filing tax? 568, 1065, 565, 540, and 1040? Thanks!
You'd file a personal state and federal tax return, and a business state and tax return. If you want details about taxes, I recommend speaking to a tax person (I'm an attorney, not a tax preparer)
Thank you so much for your formation, I Owen business men’s suit store for 14 years i’ve been sole proprietorship now it’s the time to switch to S Corp. please I need some advice. Thank you so much for your help
Do you have any specific questions about converting your business from a sole prop to an S Corp? Also you can check out the Discord as a place to ask questions: discord.gg/Sz95qBTE
@@ElizabethPW Hi Elizabeth, we are in the process of doing the same thing. Have been a sole prop and want to go s-corp. Nervous to do it ourselves, but not sure where to turn. Our tax accountant does not do that. Any suggestions, or do you think we can form the LLC and S-corp on our own? Thank you so much.
Very informative thank you so much!!
You are so welcome!
Hi Elizabeth, I am just barely starting an S corporation. This video was done a year ago, so hopefully nothing changed. I am a pharmacist so I starting a consultation using an s corporation. Are we subject by laws of limitations by the board of pharmacy when setting up an s corporation ?. Hopefully you can answer me. More power to your channel !!
To make sure we are on the same page, a pharmacist business needs to be a "professional corporation" in California, but that professional corporation can be taxed as an S Corp. Here's a vid I did on prof corps in CA th-cam.com/video/83GLSE0j_ng/w-d-xo.html and then you just follow the S Corp video directions on how to get the S Corp election with the IRS.
wow you are awesome !!! thank you
You're welcome!
Great video. If you already have an EIN as a sole proprietor, can you use it or do you have to get a new one?
You'd get a new EIN for the corporation
Can I ask you a question
So I have an LLC and am looking to switch to S Corp. I already have an EIN - do I need a new one when I switch over? Thanks in advance! Your video is perfect! Clearly explained and easy to follow!
If you are electing the LLC to be treated as an S Corp for tax purposes, then same EIN. If you are converting the LLC to an S Corp, then usually the same EIN. But if you are using a merger process to change the business from being owned by an LLC to being owned by an S Corp, then a new EIN.
Hi Elizabeth. This video was very helpful! I have a quick question: After filing the articles of incorporation online in CA, do I need to wait for them to be approved before filing for a EIN? I ask because I am planning to have my filing date be January 1st and I would like to get the ball rolling now, in December, as much as I can to hit the ground running starting in January (I'm converting my solo prop to an S Corp). I assume I would need to wait until my articles of incorporation have been approved before applying for the EIN, but I wanted to double check. Thank you!
In the past I have got the EIN on something listed as "Pending Future File Date" in December, knowing that if something gets messed up with the corp/llc (typically is just the name needs to be changed a bit) then I'll just fix it with the IRS also.
@@ElizabethPW Thank you!
Elizabeth, great video. Thank you! Quick question: For independents contractors , working from home (fully remote), services offered to businesses elsewhere but residing in CA, would you recommend that that file S-Corp in California or alternate states like Delaware, Wyoming , Nevada etc. Are there pros and cons that should influence decision-making?
Usually it makes sense to do in your own state if you have clients there and you'd need to register as a "foreign corporation" in that state anyway.
Thank you for sharing! Would this be similar to forming an LLC in Caliifornia?
Hi - here's the video on that: th-cam.com/video/kFn5A4xznE4/w-d-xo.html
Thank you for your great video. Can a Day Trader file for S Corp? or Just LLC?
I don't know of a reason a day trader could not have a corporation or have their LLC taxed as an S Corp, as long as the owners are eligible to be owners of an S Corp (must be citizens or permanent residents).
@@ElizabethPW thank you so much.
Hi, I love your videos! Ty. Would a TH-camr in Los Ángeles starting an LLC / filing as an S Corp need to ALSO get a business license as well?
In the city of LA they want every business to have a license finance.lacity.gov/
Is there another video where you talk about the next steps after your S corp is formed? Ie how to create bylaws, minutes, get a business license, etc.?
I don't have one about bylaws and such, you might try this book amzn.to/43xDhRv for some good forms/templates
Hi Elizabeth, thank you for this video 🙏. how about filling "Articles Of Incorporation" ? Do i need that?
Yep the first filing you do in California is Articles of Incorporation
Do I also need to apply for a CA SEIN to run payroll?
I have a single person Professional Corp elected to be taxed as an SCorp. I'm going to only pay myself (through a mix of W2 salary and distributions)
Yes you'll need to register as an employer in CA - here's a link with info: edd.ca.gov/en/payroll_taxes/Am_I_Required_to_Register_as_an_Employer/
@@ElizabethPW Thank you!
@@ElizabethPW By any chance you have a video on this ?
By chance you have any information or tutorial on filing form 25102 (f)? The instruction packet they give is just hard to understand.
I haven't done a video on that, but I'll add it to the list
Awesome video! If you are just starting out do you need to start with a S corp? I am doing a business part time and of course want to grow it big and go full time but can I do it later after I grow? Nd also since we are early in the year it may make sense to do it January 1st 2024 like you said. Thank so much in advance
It can be a great plan to start out as a sole proprietorship or even an LLC taxed as a sole prop, to keep it more simple / less expensive, and then change it later to be an s corp when it makes financial sense. Just make sure to get insurance and have written contracts.
Question: Do you have to have a LLC, before filling for an S Corp?
Thank you
Nope you can create a Corporation with the state and then file for the S Corp designation with the IRS
Once you have your s-corp, do you file for a DBA also or run your business off of the s-corp name? Also, have you worked with insurance agents in setting up s-corp? Business entity?
You can use the S Corp name or get a DBA -- it is up to you! I haven't worked with insurance agents, no
@@ElizabethPW I found with California Department of insurance that if you decide to have a corporation, you must file a business entity license with your corporation, and then have the California Department of insurance request you to submit five fictitious names, and they will approve one of them. After that, you must attest that you will use the approved DBA on all marketing materials dealing with insurance within the state of California. It has been a lot of work.
Thanks for this video. Just filed with the state but realized I may have acted too quickly. I have a psychotherapy practice. Should I have filled with the state differently, ie. professional? I didn't see this designation. Thanks.
Licensed professionals can't operate under an LLC for their practice in CA -- typically they form a "professional corporation" instead Probably the easiest way to fix is to cancel the current LLC or Corp asap ("short form cancellation certificate" for LLCs) and form a professional corp.
@@ElizabethPW Thanks. I didn't form an LLC. Just a regular CORP the way you showed in the video. Was there a special place on the sos.ca.gov that designated "professional" corp? I didn't see it. Should I still cancel the corp I filled?
@@michellecilia Following... I have the same question. Is this the same process for professional corporation in CA? Thx
Hi Elizabeth, thanks for the detail walkthrough of forming a corporation. I am looking to register a bookkeeping business. I have a CPA but since the business services do not need me to be licensed, I only want the business as a simple LLC to avoid register it as a SCorp with all tax implications, it it possible?
Right my understanding is that if you open up a business where those services are not licensed, then no you wouldn't need to be a professional corporation -- it is only if you provide CPA services, things where you need the license.
@@ElizabethPW thank you for the reply❤️
Thanks so much for this video! It helped a lot. I just registered an LLC (unfortunately they said it would be ready on Jan 9th but it came though in December). I really just want an S-Corp so that I can employ myself and issue myself W-2's. I'm wondering if I should cancel that LLC and start over as a corporation. Would there be any issue getting the same business name if I refiled as a corporation now that I have an LLC with the correct name?
Hm you could just have your llc be taxed as an S Corp, then you don’t have to start over
@@ElizabethPW yeah I could do that. I don't get the free year though. They registered the LLC on the 22nd of December 😂 - maybe it's not worth the risk of trying to save the extra $800 and registering a corp now in January instead.
Right it does mess up the free year. If you dissolve it ASAP (before Jan 15th) then the LLC wouldn't owe $800 for this year either (because tax year is less than 15 days and it didn't engage in business). Then you can start over with the new corporation.
@@ElizabethPW Thanks so much! Will do. I was using ZenBusiness to do everything. They used to be great but they have really been messing me around so much recently. I think I'll try do this directly with the Secretary of State this time. Thanks again for the video!
Thanks for this informational video! Is there a date that you have to file to become an S-corp by to be taxed as one for a certain year?
So if you want for the biz to be treated as an S Corp for *this* tax year, you have to elect within two months and 15 days of the start of this tax year. If you want the biz to be treated as an S Corp for *last* tax year, then you are filing a late election, which is possible (and many file it with their S Corp tax return) but you must meet the rules for the late election www.irs.gov/businesses/small-businesses-self-employed/late-election-relief
@@ElizabethPW Got it. Thank you!!
@@ElizabethPW Is it true that you can not do the late S-corp election for 2022 taxes if you were a Sole Proprietorship in 2022?
you are awesome!!!!
thanks!!
hello, first of all, thank you for your great videos! they are very helpful! may I please know if there is any time limit when initial authorized shares need to be paid up by the shareholder who created the corporation? is this time limit differs between S Corp and C Corp?
Thank you!
Until the shareholder pays for the shares, the shares would not be issued and there would not be any owners. This could be okay for a short while but if the corporate formalities are not observed in this way, it would create problems later (the corporate veil could be pierced). Also, you would not be able to be an S Corp because the shareholders have to sign the S Corp election form.
I registered my s corp to the irs first so I need to do something different to register in California?
First you need to form the Corporation in California at bizfileonline.sos.ca.gov/
Are there other steps if I have a sole proprietor and want to move to a S Corp?
It's very similar to this th-cam.com/video/iI7wyWBB8yY/w-d-xo.html
Can my new Corporation function as an open(up and running) business before I receive the Form 2553 approval from the IRS? My business has been registered by Ca in October and I plan to open my doors on 1/1/2022. (I sent in my 2553 in October and IRS informed me it would take another 4 months before approval, so sometime in March2022)
It will be back-dated to this year, if it is accepted. I've only seen rejections when the form is filled out incorrectly / is missing something, or if the biz not eligible to be an S Corp (like if owned by a non-citizen/resident). If it is something fixable, you can ask for relief for a late election (check out www.irs.gov/instructions/i2553) to fix it.
@@ElizabethPW Thank you so much for your video and for your helpful reply! Knowledge is power so thank you again!
In regards to filing form 2553 in a community property state (California), does the other spouse have to be listed as a consenting spouse regardless if he/she actually has any % ownership/shares...aka solely owned by one spouse with no one else on any of the incorporating paperwork.
Hm my understanding is that for the IRS form 2553 it is just the spouse(s) that have ownership shares - the IRS doesn't care much about it. It is more of a state law thing where the spouse can challenge shares being sold or altered without consent (typically when sold for less than fair market value or given as a gift). Spousal consent tends to be overdone but it would be good to have "spousal consent" in writing just in case, since not really hard.
Hello Elizabeth, thank you for your guidance, I did file an INC S Corp. Do I still need to file form 2553?
If you have only created the corporation with the state, yes you need to file form 2553 to get the S Corp tax designation
Hi Elizabeth, I am currently looking into obtaining my c-10 (electrical) contractors license. My application is asking for me to identify my business entity. I am leaning more towards filing for an s-corp in the future. If i were to identify as a sole ownership now, could that complicate things for me down the road when reassigning my entity? Thank you for your help 🙏
My understanding is that it can be a hassle to switch over the contractor licensing to a new business entity, but people do it
Hi! If I just filed for my business now am I still exempt from tax year? I did the form for general stock and it’s still pending review bc I literally just did a few minutes ago. And I know that after they confirm it’s all good I have to follow your next steps to actually make it an S corp. my question is, once I do that am I exempt from the $800 or would I still have to pay for my first year. Also my filing fee was only $5 but you keep saying $105, has something changed? Because I saw the website is different now as well. Thank you!!
The exempt first year thing is still in place as of now (feb 2023). Yep they have current waived the filing fee so it is lower right now (it will go back to the regular fee later this year I think)
@@ElizabethPW thank you!
Hi just saw your video very helpful, I am starting to process for S corp once I file and pay fees will I get a binder for the laws and minutes , etc...
Here's a book I recommend to use to create your corporate records - www.amazon.com/Corporate-Records-Handbook-Meetings-Resolutions/dp/1413326455 Nolo Publication's "Corporate Records Handbook, The: Meetings, Minutes & Resolutions"
For the parts that don't apply to our business, do we still fax those pages or no? Thank you
Yes fax even the blank pages, because otherwise the IRS thinks they are just missing - they need to know they are blank
@ElizabethPW thank you. Your videos are a blessing.
I Have a question; i am wanting to do both, elect my LLC to be a s corporation, as well as change the name. Can this be done at the same time? if so, how exactly? Thank you so much, and your videos are incredibly helpful!
If you want to elect for your LLC to be taxed as an S Corp, you do that with the IRS th-cam.com/video/-CXGILTIGmI/w-d-xo.html . To change the name of the LLC, you do that with the state (you "amend" the LLC) th-cam.com/video/6Z_X1dTTdU4/w-d-xo.html .
Hi, should I file for an S corp before I apply for my license or after I apply for my contractors license?
Also, should I get a Professional Corp or a general stock corp is fine?
If you want the contractor license to be the corporation, then yes you form the corporation first. A contractor biz can be a general stock (there's a special rule)
Thank you! :)@@ElizabethPW
Hi Elizabeth,
Awesome video. I currently have a Sole Proprietorship and am looking to form an S-Corp.
I already have an EIN number for the business license that I have so that I can open a business bank account.
When I do an S-Corp, will I need a new EIN#? Would I need to setup a new bank account or can I use my current one?
Nevermind. I found the answer in one of your other videos.
Glad you found it!
when I go into secretary of state web site is it file a corporation statment of information?
The statement of information is an annual report for a company that already exists
Is a TIN different than a EIN? Thank you
Usually when people talk about a TIN they are talking about a ITIN (individual tax id number). But an EIN is a type of tax id number (TIN) so if you have an EIN for your corporation, you're set.
Just got approved by the Secretary of State of CA as a professional corporation (one-person business). Filed my Articles of Incorporation and Statement of Information with California and it was approved. Just finished my Bylaws, Minutes, and Issued myself Stock Certificate. After I Get EIN from the IRS with S-Corp Election and File Form 2533 with the IRS, is there anything else I need to do?
Depends on your profession, you may need to file something with your regulatory board to tell them about your prof corp and/or get their approval
I am and newbe, planning to get into an offer from a dentist house that has S Corp formed. They are asking me to form a S corp as well and get paid and then pay them percentage to be part of their set up. Question 1. Should I ask how many shares their S Corp has? Should I just have an S Corp and do Corp to Corp payment?
Hm that's not really something that can be handled in a youtube comment, sorry!
Hi Elizabeth, thank you so much for such an informative video! I have a question about utilizing a coworking space (for example) as business address if I'd be working from home. Is this something I have to be renting out or could I simply find a coworking space near me and put that address down?
Yes you'd need to rent out space there or have a membership there (spaces have different models of how they work)
Does an S Corp in CA need the words "company/Inc/incorporated" at the end?
Yes - there’s a list but most people use Inc or Corp
Hi! Should i register for a EIN first before submitting "Form corporation" form?
Create the corporation before you get the EIN, just in case it does not go through and you need to change the name or something
What should i put for the minimum price of each share??
Usually you want the minimum price (par value) to be really small. Here's an article about it www.nolo.com/legal-encyclopedia/what-is-par-value-stock.html
Hi Elizabeth! if we put lets say 10000 shares on the corporation filing form, doesn’t that conflict with the IRS form 2553 where it says “have no more than 100 shareholders”?
It's number of shareholder (humans) not number of shares, so that's ok
Didn’t notice thar. Thank you 🙏🏼
Is filing 45 days late to form an s corp, common and is there penalty for being 45 days late?
I bet that it is common - if you fill out the part of the form asking for "late election relief" and meet the requirements of that correctly, then you shouldn't have to pay a penalty.
Can I file for an EIN and S Corp status while waiting for my corporation filing to be processed by the CA SOS?
I'd recommend waiting until approval, just in case it is denied and you have to chance something in the filing like the name
Thanks for the response. Thankfully all got approved quickly and I have EIN now too.
Hi Elizabeth, for applying the EIN online; does the IRS mandate E-signature?
Well if you apply online then the e-signature that you do is part of that online system, that's what they accept
Hi. I have created an S-Corp last year in September. Since then my business is inactive I haven’t even got my EIN number yet. My question is do I still need to pay any fee to FTB? Or file any tax return ?
If you created a corporation, even if you don't use it, California still wants a tax return filed even if it is with all zeros. But under the law as of right now, they are waiving the $800 minimum franchise fee tax for the first calendar year -- you'd want to file to take advantage of that for tax year 2022. Also -- if you don't have an EIN then you also may have a C Corp, not an S Corp -- to have an S Corp you have to file an election with the IRS (and I'd think you would have got the EIN if you did the S Corp election, so I wonder if you have not done that yet).
If I have EIN as sole do I need to file for new EIN for S Corp?
Yes the S Corp gets its own EIN
Thank you for the video. When I file for a corporation, following the instructions in the 1st half your video, does it automatically handle Minutes Meeting, Bylaws, etc.? And how do you link your Business Bank Account to your recently opened Corporation?
No you need to do the minutes/bylaws/etc yourself. I recommend this book / set of templates from Nolo store.nolo.com/products/the-corporate-records-handbook-cormi.html - and for your business bank account, you'd need to set up a corporate bank account using the corporation name & EIN.