A type of corporate entity authorized by Pennsylvania state law is a PA S corporation. Limited liability protection for shareholders and pass-through taxation are only two advantages that this sort of corporation offers to business owners. We will address some of the most often asked issues concerning PA S corporations in this post, such as how to form one and whether Pennsylvania needs a separate S corp election.
How to Form a S Corp in Pennsylvania
In Pennsylvania, forming a S company is a rather simple procedure. Your corporation’s name must first be decided upon, and you must confirm that it is available with the Pennsylvania Department of State. You must submit Articles of Incorporation to the Department of State once you have decided on a name for your business. The fundamental structure of your organization will be outlined in this document, along with the quantity of stock shares you plan to issue and the names and addresses of your founding directors.
You will need to get all essential licenses and permits to run your business in Pennsylvania after submitting your articles of incorporation. Additionally, you might have to register for local and state taxes, such as sales tax and employee withholding tax.
Should a S Corp election be held separately in Pennsylvania? No, a separate S corp election is not required in Pennsylvania. Instead, for the purposes of federal taxation, Pennsylvania automatically classifies corporations as C corporations. But businesses can choose to be taxed as S companies by submitting IRS Form 2553. Within 75 days of the commencement of the corporation’s tax year, this choice must be taken.
Can a S Corporation Use a DBA? Yes, a DBA, or “doing business as” name, is permissible for a S corporation. It’s crucial to remember that a DBA offers no additional liability protection and is not a distinct legal organization. You will still be liable for all of the corporation’s debts and liabilities even if you decide to run your S corp under a DBA.
How Much Does it Cost to Form a S Corporation in Pennsylvania? Several elements, such as the intricacy of your company structure and whether you decide to enlist the help of an accountant or an attorney, will affect the price of forming a S corp in Pennsylvania. Generally speaking, you should budget several hundred dollars for filing fees as well as other costs related to forming your organization.
In conclusion, a PA S corporation can offer business owners a variety of advantages, such as pass-through taxation and limited liability protection. If you want to form a S corporation in Pennsylvania, the procedure is rather simple and may be finished with the aid of an accountant or lawyer. You can decide if a PA S corporation is the best sort of business entity for you by having a basic understanding of them.
Yes, S corp owners who work for the business must accept a fair salary. This is so that the company’s revenues and losses can be reported on the owner’s personal tax return since S companies are pass-through organizations. To avoid underreporting their income and potentially avoiding payroll taxes, the IRS requires that S corp owners who work for the company pay themselves a reasonable remuneration.