How to form an S-corporation for banking

Introduction

If you’re a small business owner who has been thinking about opening an S-corporation, this article will help you get started. We’ll walk through the steps to set up your new bank account, file all of your paperwork, and make sure everything is in place so that you can start banking as an S-corporation.

Make sure you’re eligible

In order to form an S-corporation, you must be a United States citizen or resident alien. You must be at least 18 years old, and you cannot be a convicted felon with a criminal record. A conviction for tax evasion is also disqualifying, as well as any convictions related to money laundering or other financial crimes.

In addition to these basic requirements, you should also know that there are many different types of corporations available—you can create an LLC (Limited Liability Company), C-corporation, S-corporation or even an L3C (low profit limited liability company). The type of corporation you choose will determine how much tax liability falls on your individual income and how much falls on the business itself.

File the annual report with your state

This will be a short form that lists the names and addresses of officers, directors, and shareholders. The annual report must be filed by the 15th day of the 3rd month after the end of your corporation’s tax year.

It is important that you protect yourself against liability by having all required documents in place before opening an account for business purposes or making any sales transactions as an S-corporation.

Create and file the employer identification number with the IRS

The IRS will assign you an employer identification number for your business. The tax identification number is also given to you by the IRS, but this one is different from your EIN. You can find out more information about how to obtain these numbers on the IRS website, or if you have other questions about setting up S-corporation status for your banking company, consult a tax professional.

Open a business bank account

You can do this at a local bank, or you can open an online bank account. You will need to provide your business name and address, as well as your social security number.

When you have obtained this status, you will be able to set up a corporate structure for your business. This means that all profits and losses are accounted for separately from your personal finances. You also have the option of having several shareholders, who will receive dividends according to their ownership stake in the company. The bank will also likely ask for your business license. Once you open an account, you will receive a routing number and account number.

Keep your personal finances separate from your business finances

The reason is simple: if you aren’t careful, the IRS can tax you as a personal shareholder on income that’s actually business income. This can be a big problem because the tax rates are much higher for personal shareholders than they are for corporations (and even lower if you have losses).

To avoid this problem, make sure that all expenses related to running your business go through your business account and not into your personal one. If possible, open up an entirely new bank account just for the S-corporation—it’ll be easier to keep track of things this way. You should also use a separate credit card so that there’s no confusion about whether certain purchases were made with company funds or not.

Finally, when filling out IRS Schedule C forms at tax time—which show all of your business income and expenses from last year—make sure all of these lines are properly labeled so that it’s clear which ones belong in each column on Form 1040 Line 22a: Income from Businesses You Own (or Losses From Partnerships).

S-corporations are taxed differently than other corporations, which can be a huge benefit for some businesses

Unlike C-corporations, S-corps are pass-through entities that do not pay corporate income tax. Instead, the corporation’s profits are passed through to its owners and taxed at their individual rates.

So, it can be an amazing opportunity for small businesses to make sure you incorporate it with the type of the suitable structure hence; an S-corporation!

Conclusion

If you’re considering forming an S-corporation, you can save yourself a lot of time and money by doing it right the first time. Taking the proper steps to form your business will help ensure that your finances are kept separate from those of your personal life and that you pay as little in taxes as possible on whatever profits you make.