How to form an S-corporation for Computers equipment


An S-corporation is a corporation with a single class of stock. As an owner of an S-corporation, you can avoid double taxation. An S-corporation election is filed with the Internal Revenue Service (IRS) to establish your business’s legal status as an S corporation. This article will address the steps that are necessary to form an S corporation for computers or computer equipment.

Determine your business’s legal status

Before you begin the process of forming your business, it is important to determine the type of legal structure that will best suit your needs. There are four basic structures:

  • S-corporation: It is a separate taxable entity from its owners. It has more flexibility than C corporations in terms of profit distribution.
  • C-corporation: A C corporation pays corporate income tax on its earnings before they’re distributed to shareholders and then individual income taxes on those dividends.
  • Limited liability company (LLC): They provide their owners with protection against personal liability while also allowing them to enjoy pass-through taxes. Instead of paying tax on company profits, LLC members pay self-employment tax  on their distributive share of income after subtracting reasonable compensation for services provided by members.
  • Partnership: Partnerships are not subject to federal income tax but do face an additional layer of self-employment taxes if their partners provide any labor for their business.

Pick a name for your business

A company name that is too similar to another company could cause consumer confusion. The easiest way to avoid this problem is by picking a name that doesn’t sound like any other company name.

To find out whether your business’ proposed name sounds confusingly similar to another business’ established trade or service mark, check its availability before registering it with the state and/or federal governments.

Get an EIN from IRS

This is a unique number assigned by the IRS to identify your business. This number will be used on tax forms, tax returns and other business documents. It’s not the same as a social security number, which you may already have if you are an individual entrepreneur or sole proprietor. The EIN can be obtained by filing Form SS-4 with the IRS office closest to where you are located or doing business.

Set up a corporate bank account

  • Open a business bank account.
  • Choose a bank that has branches near your business’s location and has a good reputation for customer service.
  • Look for banks with low fees and charges, as you will be opening the account for tax purposes only.
  • Look for an online banking system that makes managing the finances of your business easy and convenient.

File articles of incorporation

After you’ve determined the structure of your business, it’s time to file articles of incorporation with the secretary of state. This is a legal document that sets out your company’s structure and purpose.

It should include:

  • The name of your corporation (S-corporation or LLC)
  • The address where you will be doing business from
  • A statement about who owns shares in the company (if applicable)

Hold an initial board of directors meeting

When you have a business, there are some legal steps you must take to get started. One of these is setting up your board of directors. A board of directors is a group of individuals who oversee the daily operations of your company and make decisions on things like hiring new employees, buying new equipment for your office, borrowing money from banks and other financial institutions and more.

The number of people on your board will depend on what type of corporation you’re forming: If it’s an S-corporation or C-corporation (or any other type), then its size may vary but no fewer than three people can be on the initial board.

Establish corporate bylaws

The bylaws of your corporation should be a document that describes the rules and regulations for operation of the company. It’s like a constitution for an organization, so it’s important to get some help writing them. You don’t have to hire an attorney or anything, but if you do have questions about what should be included in your bylaws and how they should be formatted.

Issue stock certificates to owners of the company

Stock certificates are issued to owners of the company, who are called shareholders. The stock certificates are used to show ownership hence, issued to shareholders at the time of incorporation.

Adopt a voting shareholder agreement

It is an important part of the S-corporation process. Without it, you risk losing control over your company to a different group of shareholders. The agreement should be signed by all shareholders and kept on file in the company’s headquarters.

In addition to signing off on this document, each shareholder should also elect to receive any profits made from selling used computers and laptops.


This article should have given you a good understanding of how to form an S corporation, and hopefully it will help you save time and money. If you’ve got any questions, just let us know in the comments below!

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