How to form an S-corporation for Beauty and Personal

Introduction

Being your own boss and running a business is a dream for many people. However, it can be difficult to get started due to the high costs of setting up a business. Fortunately, there are several ways you can reduce these expenses by forming an S-corporation in order to enjoy personal tax advantages and limited liability protection.

Step 1: Elect S Corporation Status

The first step to forming an S-corporation is to choose your business structure. As a sole proprietor, you’re operating as an individual with no legal entity. You can use this type of business structure for any beauty or personal service business you start up.

However, if you want to incorporate yourself and enjoy the benefits of being a corporation that includes limited liability protection and tax savings (among other benefits), then it would be best for you to form an S-corporation instead.

To form an S-corporation:

• Be a US citizen or resident alien at least 18 years old;
• Not have any outstanding tax issues with the IRS;
• Have at least two shareholders who are also US citizens or residents;
• Have a valid business purpose;

Step 2: Choose a business name

There are several things to consider when choosing a company name:

• Make sure that your business name does not conflict with any other existing businesses. Your State Corporation Commission will have information about this, or you can do an internet search.
• Choose a name that will be easy to remember, spell and pronounce so customers can find you easily when searching online or in local listings.
• Make sure the name is clear and concise enough so people know what type of business it is without having to read too much into it or ask questions before they buy from you.

Step 3: File your articles of incorporation

To form an S-corporation, you’ll need to submit Articles of Incorporation with the Secretary of State in your state; some states also require filing with county offices as well.

When going through this process, make sure that you’re including all necessary information. This includes:

• The company name.
• Its business address and mailing address.
• The names and addresses of each shareholder/partner/investor who owns more than 25 percent shares in the corporation.
• A statement about when shareholders must be given notice if there’s a change in ownership or management structure.

Step 4: Hold a meeting of the incorporators

The meeting of the incorporators should be held in person and be conducted in the state where you want to form your corporation. The meeting can be held any time on a date that is not a business day, such as the weekend or even late at night.

Step 5: Get an EIN (Employer Identification Number)

When you apply for your EIN, the IRS will assign it to your business and send it back to you in the form of a confirmation letter or fax. You’ll need this number when filing taxes and reporting income, so don’t forget!

To apply for an EIN via mail:

• Complete Form SS-4 by filling out the sections related to corporations.
• Include a copy of proof of incorporation with signed articles of incorporation or bylaws.
• Write down who is authorized to sign the form on behalf of the company if different from who filed it in step 1 above (this could be just one person if only one person has legal power over decisions).

Step 6: Issue Company Stock

To do this, go ahead and visit your corporate secretary and ask them to issue some shares. When issuing stock, make sure that each share is labeled with a serial number so that you can keep track of who owns what shares.

This part gets complicated because there are several different ways to issue stock:

• Issuing dividends (if you’re not familiar with the concept of dividends or don’t understand how they work yet in an S-corporation context, it’s okay—it will be covered later)
• Issuing shares directly from treasury (in other words, issuing new shares out of thin air)
• Issuing shares out of treasury or buying back previously issued shares from your shareholders

Learn how to form an S-corporation so you can benefit from its tax advantages

An S corporation is a business entity that has taken on the tax status of a partnership or sole proprietorship, but with limited liability for its owners. This means that owners are not personally taxed on the income of the company, but instead have to pay taxes only at the corporate level. Because there are no double-taxation issues with an S corporation, it’s beneficial to incorporate in certain situations (like when you plan on operating your beauty business as a one-person show).

Conclusion

We hope that this blog post has helped you understand how to form an S-corporation and enjoy its many benefits. If you have any questions or concerns, please do contact us today!