How to form an S-corporation for Coffee
Introduction
If you’re looking for new ways to grow your business, forming an S-corporation is a good option. An S-corporation allows you to take advantage of the benefits of being a corporation while limiting your liability. Creating an S-corporation can be complicated, though, so it’s important that you do everything correctly from the beginning. If you’ve decided to form an S-corporation, here are some steps you need to take:
There are several steps you need to take to form an S-corporation
If you still want to form an S-Corporation for your coffee shop after learning about the process, start by doing some research on how to do so. You will need to know what steps you have to take and how long they will take in order to be successful in forming your corporation at all.
Make a list of your business’s assets, including equipment and supply needs
- Determine how much you’ll spend on each item by looking at the prices offered by other companies that sell similar products or services in your area.
- Figure out how much money you’ll need to start the business and run it until it can generate its own revenue stream, then add this amount to your initial investment total.
Determine how many shares you need for the corporation
The number of shares you need depends on the size of your business, and whether or not it has multiple owners. In general, if a small business has fewer than 100 shareholders, then it is considered an S corporation. Once you have decided to form an S corporation for coffee, decide how much each share should be worth by taking into account how much money it takes to run a company like yours every year—and divide that number by two because there are two options: common stock or preferred stock.
Get the necessary tax identification numbers for state and federal income tax purposes
In order to form an S-corporation, you need the following:
- An Employer Identification Number (EIN). You can apply for an EIN online at the IRS website. Use your bank account information as the “Taxpayer ID.”
- A state tax identification number. To get your state tax ID, contact your state’s revenue department. You’ll likely need to provide some basic information about yourself and your business plans.
- A federal tax identification number (SSN). If you already have a Social Security Number (SSN), congratulations! Your application process is complete after obtaining these numbers and applying them to all relevant documents throughout the life of your corporation.
Name your company and register it with the state
- File a DBA (Doing Business As) if you want to use a name other than the legal name of your business. For example, if you choose “Joe’s Coffee Company” for your corporate title and Joe is not an owner or officer of the company, then you would need to file a DBA as “Joe’s Coffee Co., Inc.” You would also need to file a fictitious name certificate if someone else is doing business under another name that is similar to yours in any way, shape or form (for example: Joe’s Coffee Shop). A fictitious name license may be required if you operate under an assumed or fictitious name in addition to using an official registered trade name or trademarked logo on signage, advertising materials and other printed matter as well as websites and social media accounts (for example: Joe’s Coffee Shop).
File “Articles of Incorporation” with the state
Which includes details about your corporation and its assets (and can also serve as a business plan). Set up bank accounts for payroll and recordkeeping purposes. Register for sales tax permits if required by your city or county government; this requirement varies from state to state but may include submitting tax returns every month/quarter depending upon how often you collect sales receipts from customers/clients.
Create bylaws
These are the rules that govern how your business operates, and you should create them with your partners, not a lawyer. The bylaws should be reviewed and updated regularly, since they’re subject to change as your company grows or shrinks in size and scope.
At a bare minimum, every corporation needs an annual shareholders’ meeting where all owners can participate in making decisions about how their business will grow and evolve over time.
Open a business bank account with a financial institution of your choice
Just as you would when opening any other type of bank account, the process is similar when opening an S-corporation business bank account.
A regular business checking or savings account is sufficient for most businesses and can be opened easily over the phone or online. There are no fees associated with opening this type of account, but there may be fees associated with maintaining it (for example, insufficient funds fees).
Obtain licenses and permits
Obtaining a license can be complicated, but there are resources available online to help you through this process.
Licenses and permits are required by law for all businesses that operate in the U.S., regardless of type or size. These documents prove that your company is authorized to do business within a certain jurisdiction—and ensure that it meets certain standards for public health and safety. Licenses also allow government officials access to information about your company’s activities so they can ensure that you’re following the rules set out by local authorities such as county or city officials who oversee matters related to zoning regulations or building codes in general areas where customers might frequent regularly when shopping at nearby stores.
Creating an S-corporation is a complicated process that should be done correctly right from the start so it doesn’t become legal trouble for you later on down the road
The best way to ensure that you’re getting it right from the start is to consult with a qualified accountant or lawyer. If you don’t have anyone in your network who can help, there are plenty of online resources available.
It’s important that you make sure your lawyer or accountant has experience with S-corporations because they’re very different than other types of business entities.
Conclusion
The process of creating an S-corporation is not a simple one, but with proper planning and preparation, you’ll be able to avoid many legal pitfalls that can delay or even derail your plans. If you’re considering forming an S-corporation for your coffee business, consult with a professional who has experience in this area before taking any steps towards doing so.
