In order to establish a S corporation in Illinois, a normal corporation must first be set up by submitting articles of incorporation to the state’s secretary of state. Then, in order to choose S company status, you must submit Form 2553 to the IRS. The corporation’s income, deductions, and credits must also be reported on Form 1120S, which must be filed with the IRS every year. In Illinois, how are S Corps taxed?
S corporations are subject to the same taxation in Illinois as they are under federal law. S corporations must submit Form IL-1120-ST to the Illinois Department of Revenue every year to report their earnings, credits, and deductions. The shareholders of a S corporation must disclose their portion of the corporation’s income or loss on their personal tax returns even though the S corporation itself does not pay taxes on its income.
The particular requirements of your firm will determine whether you should create an LLC or S corporation. Both entities provide minimal liability protection, but from a tax perspective, a S company might be preferable. While an LLC does not have the same tax advantages as a S company, it is possible for businesses to avoid paying some taxes. An LLC, however, could be less formal and require less upkeep than a S company.
The expenses for submitting articles of incorporation, as well as the costs for tax and legal services, all play a role in the price of incorporating a S corporation in Illinois. The Secretary of State of Illinois charges $150 for the filing of articles of incorporation. Form 2553 is free to submit to the IRS, however there can be charges for tax preparation and legal counsel. It is advised to speak with a tax expert or lawyer to calculate the overall cost of setting up a S corporation in Illinois.
S companies are a common option for small enterprises and are recognized in Illinois. You must first create a normal corporation in Illinois before filing Form 2553 with the IRS to choose the S corporation status. S corporations offer some tax advantages to business owners and are taxed similarly at the federal and state levels. Weighing the benefits and drawbacks of each structure is crucial when selecting whether to create an LLC or S company. The fees for filing and professional services affect how much it costs to create a S corporation in Illinois.