How to form an S-corporation for Agriculture


If you’re a farmer, you may be considering forming a corporation. The benefits of doing so are numerous and can help reduce your tax liability as well as protect your business’s assets. However, forming a corporation isn’t always straightforward — especially if you’re just getting started. In this article, we’ll explore what it means to form an S corporation for agriculture and how to go about doing so in California specifically.

What is an S corporation?

An S corporation is a type of corporation that can pass corporate income, losses, deductions, and credits through to its shareholders for federal income tax purposes. S corporations are also treated as pass-through entities for self-employment tax purposes.

In an S corporation structure, the company’s profits or losses are “passed through” the entity to the shareholders who report them directly on their personal tax returns. This means that if your company isn’t profitable in a given year you won’t pay any taxes on those losses; instead, the money would be carried forward for use in future years when your business does generate income again.

How to form an S corporation

You need to form a corporation to be able to have tax exemptions. If you’re already in the agriculture business, then you may already be familiar with what it means to form a corporation. However, if you are new to this process or just want more information on how it works, here is what you need:

An S corporation is a type of business that can exist as either a C-corporation or an LLC (limited liability Corporation). It’s similar to other types of corporations in that it gives its owners limited liability protection from business debts and lawsuits brought against them personally by creditors. The difference between an S-corporation and other types of corporations lies in how income taxes are handled; specifically when profits are distributed back down through the company hierarchy instead of being paid out individually as dividends like most types would do for their stockholders/owners.

How to choose a name for your business

Here are some tips to help you choose the right name for your business:

  • Choose a name that’s unique. A common mistake people make when forming an S-Corporation is picking a very common word as the title of their company. If there’s already another company with exactly the same title as yours in another state, it may not be possible for them to both operate under this exact same name at once (in fact, they may not even legally operate under this exact same title).

How to register your business’s name

You can do this with the secretary of state in which your company will be formed, or online if you’re filing online.

  • To register: Go to the website of your state’s secretary of state and click on “corporation search.” Type in the name of your company and click “search.” If there are no results, you can go ahead and fill out an application for incorporation there.
  • If you find that someone else has already taken the name of your intended business, take note: It’s not too late! You can still use this name if it isn’t trademarked by another company using it for similar purposes. However, before proceeding further with the registration of this business name (or any other), make sure that no one else owns any trade names that could infringe upon your new S-corp’s trademarked brand identity or product line.

Verify with the state that the name is available

You can check with your state’s website or business name database, but if you’re not sure which entity type to choose, it’s best to ask a professional. Your local chamber of commerce may have a list of preferred business names that have already been approved by the state. In addition, you should contact:

  • The county clerk’s office to determine whether there are any other companies in operation under your proposed company name; if so, what you will need to do in order for the state government authorities not to get confused about who owns what property
  • The secretary of state’s office (if applicable)

How to prepare bylaws and establish a board of directors

The board of directors is the governing body of a corporation and consists of one or more individuals elected by the shareholders. Usually, there are no specific requirements as to who can serve on a board; however, most states require that at least one director lives within their jurisdiction (where an office may be located). Once you’ve decided who should serve as your corporate directors—and how many–it’s time to turn attention back towards preparation for your S-corporation formation.


  • Choose a name for your business.
  • Register your business’s name with the state.
  • Establish a board of directors. This should include at least three people, but no more than 15 members. You may also choose to have an executive committee instead of or in addition to a full board of directors.
  • Prepare bylaws for your corporation, which will cover topics such as how meetings are conducted and who has voting rights within the corporation (and how many votes they each get). In most states, these bylaws must follow some basic provisions set forth by law.


If you’re ready to form an S corporation, the process isn’t too complicated. You can do it yourself or hire an attorney to help you through the steps. The most important thing is to make sure that your business name has not already been taken and that it isn’t confusingly similar to another company.

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