How to form an S-corporation for Grains


S-Corporations, also known as Subchapter S corporations, are complicated creatures. They can be a great way to cut down on self-employment taxes and manage your growing business, but they require a lot of work and planning if you’re going to use them properly. Here’s what you need to know about forming an S corporation for grains:

Determine who’s in control

The first thing to understand is that the S corporation is a separate legal entity from its shareholders. This means that the shareholders are not liable for the debts of the corporation and it also means that they are personally responsible for paying their own taxes on income received by their share in the company.

Unlike with a limited liability company LLC or general partnership, there is no risk of losing your personal assets if something goes wrong with your business because you have formed an S corporation as opposed to one of these other options. However, unlike sole proprietorships and trusts where all assets are owned by one person and will pass into his/her estate upon death, assets owned by an S corporation can be transferred upon death without any additional tax implications either upon sale or through inheritance.

Decide which year to start using the S corporation

  • Make an S corporation election. You can form an S corporation by filing Form 2553, Election by a Small Business Corporation. The form must be filed by the due date of your corporation’s first income tax return (including extensions). To make the election effective for any tax year ending after 1986, you must file on or before the 15th day of its 3rd month; otherwise, you can make it effective for any tax year beginning after 1986 by filing within one year from the close of that taxable year.
  • Decide when to use it. While there are no restrictions on when in time you can elect to have your business taxed as an S corporation, there may be tax advantages to doing so at different times; consult with a certified public accountant for assistance in making this determination.

Assign stock ownership

All stockholders must be individuals, not other corporations. Stockholders must also be U.S. citizens or residents at the time they purchase their shares in the corporation, though some exceptions apply to non-resident aliens who are authorized by the IRS to own stock in an S corporation.

The number of shares is determined by dividing the total value of your company’s assets by its total number of outstanding shares—this gives you a per-share value that can be assigned to each shareholder during incorporation. This process also helps determine if there will be any preferred stock or if all shareholders have equal rights with no preference for certain types of shareholders over others

Elect officers and directors

  • This can be any person or entity that has a US address, including individuals and corporations.
  • You need at least one officer (president, vice president, secretary, or treasurer) and at least two directors (none of which can be an officer).
  • Officers must be natural persons who are U.S. citizens or resident aliens; corporations cannot hold any office in an S corporation. Additionally, certain restrictions apply if you choose to use your personal residence as the principal place of business for an S corporation; these restrictions depend on the type of residence involved.

Set up a registered agent and office

Your business will not be able to conduct any business if you don’t have a registered agent in the state where your business is located. The registered agent must be located in the state where your business is located and must be a resident of the state where your business is located.

Designate a fiscal year end

The S-corporation has a fiscal year that ends on December 31st. This designation is made by the shareholders of the business as it is being formed, so this will be decided before you begin your incorporation process. If you choose to have your fiscal year end on December 31st, you will need to file an extension until April 15th in order to file a tax return and pay taxes for that period.

If possible, it is recommended that business owners use January 1st as their fiscal year end date because it allows them more time to plan for tax payments and filings without having to extend their filing deadlines each year. You can also choose other dates if necessary; however, make sure these dates don’t conflict with any IRS requirements related to filing deadlines or other tax matters before making your decision!

S-Corporations are complex, but they have some very real tax advantages

S-Corporations are a type of corporation that can pass corporate income, losses, deductions and credit through to their shareholders for federal income tax purposes.

Because an S-Corp is treated as a pass-through entity for tax purposes, the corporation itself doesn’t pay taxes at the corporate level. Instead, all income or loss is passed through to its shareholders who report it on their personal tax returns.

A key benefit of this structure is that it allows you to avoid double taxation of your business’ profits: once when they’re earned by the business (at reduced rates) and again when they’re distributed as dividends to shareholders.


Once you have all of the paperwork in order, you’ll be ready to start operating as an S corporation. Remember that this is a complex process and it may take several months before everything is finalized. It’s also important to remember that there are many different ways to form an S-Corporation and these steps may not apply if your company does not require more than one owner or has less than 100 employees.

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