How to form an S-corporation for Furniture

Introduction

You’ve been thinking about launching that new business, and you know you want to incorporate it, but it’s not clear whether you should go with a C corporation or an S corporation. While both business types are treated similarly by the IRS, there are some differences between them—and those differences may affect your tax liability. One of the main differences between the two is how each type handles payroll taxes. If you have employees, this could be an important consideration for your decision-making process. In this article, we’ll explore how to form an S corp from start to finish. We’ll cover what it takes to do so legally and what factors can influence your choice between these two types of corporations.

Consider your business purpose

• An S corporation is a type of corporation that has federal income tax advantages.
• It provides limited liability protection for its owners, who are referred to as shareholders.
• The shareholders of an S corp can choose whether or not they want to be taxed as a partnership (and thus file Form 1065) or a corporation (and thus file Form 1120S).
• If you’re just starting out in your furniture business and want to minimize your taxes, an S corp is likely the best option for you.
• However, there are downsides to forming an S corp:

File with your state

You’ll fill out a form and pay a filing fee. The filing fee varies from state to state; it usually takes about 30 days for the process to be complete.

Handle taxes

An S-corporation is a type of corporation that receives special tax treatment. In most states, it’s easier to form an S-corporation than it is to form a traditional C corporation or an LLC.

To form an S-corporation, you need to file Form 2553 with the IRS and your state Department of Revenue. You’ll also have to pay federal and state filing fees. Once you’ve filed this paperwork, your business will be officially designated as an S-corporation by both the IRS and your state government.

As part of forming your new business entity as an S-Corp, you’ll need to handle several important tax matters:

• Keep good records so you can accurately report all income on your taxes every quarter or half year.*
• Pay quarterly taxes like any other small business.*
• Pay self-employment taxes at least quarterly (Social Security and Medicare). This means that if someone else does your books for you, he or she has some extra work each quarter because those payments must be made on time.*
• Do not pay yourself a salary; instead, treat all payments made by customers directly into their bank accounts as dividends.*
• Do not pay yourself interest on loans from investors; instead add these costs back into overhead expenses when calculating overhead percentages on sales invoices (your profit margin should then increase accordingly).

Follow these steps to form an S corporation

Step 1: Choose a name for your S corp

The first step in forming an S corporation is to choose a name for it. You’ll need to choose something that doesn’t sound like it’s trying to be anything else (like an LLC), and you’ll also want your name to be catchy enough so people remember it later on. It’s usually best not to use “furniture” in the name since this can cause confusion with customers who will think furniture is what you sell exclusively, instead of just one category of products you offer alongside others like clothing or electronics.

Step 2: Fill out the appropriate forms with your state government

After choosing a name for your corporation, go online and find out how much starting capital it takes before filing with the state government where you live (this varies by location). Once this information has been obtained, file with them by filling out paperwork that explains why they should allow this business formation within their borders.

Conclusion

We hope this post has helped you understand the basics of how to form an S corporation. If you’re considering becoming an S corporation, it’s important to understand the process so that you know what you need to do next and what kind of tax implications there may be. If you have questions about forming an S corp or would like help setting up one for yourself, contact us today!