How to form an S-corporation for Information Technology


An S-corporation is a type of corporation that enjoys limited liability, like a traditional C-corporation. However, it has fewer filing requirements and less stringent rules regarding the election and removal of directors than a traditional corporation. The IRS defines an S corporation as “a domestic corporation with no more than 75 shareholders and whose election to be treated as an S corporation is in effect.”

Choose a name for the corporation

The name you choose must be distinguishable from other names on file with your state, it cannot be the same as any other name on file, and it must not be misleading or offensive. In addition, the name should not include a word that is vulgar or illegal (such as “satisfaction” or “incorporated”).

It’s also important to note that some states have specific requirements regarding how long your corporation’s name must be. For example, New Jersey requires that all corporations have at least one word in their names; while Delaware requires them to have at least three words.

File an application of reservation of name

When you file this form, you must pay a fee and agree not to use the reserved name in any way during the 30-day period while it’s pending. If you want to reserve a name for longer than 30 days, you can do so by filing another application after 30 days have passed. You must reserve a company name for up to 3 years at a time before it expires; after that time has elapsed, you can either renew your reservation or select another one and start over again by filing an application with the Nevada Secretary of State’s office (again paying another fee).

File the Articles of Incorporation

The purpose of the Articles of Incorporation is to provide essential information about your company, including its name and business purpose, as well as how it will be managed. It is also used to establish how many votes each shareholder has in making decisions on behalf of the company.

The following should be included in your Articles of Incorporation:

  • Name and address of the principal office
  • Name and address of registered agent (the person who receives important legal documents on behalf of your corporation)
  • Entity type (such as “general corporation” or “limited partnership”)
  • Number and types/classes/series if applicable; authorized shares; par value if applicable; designations for classes/series detailing any limitations on transferability or voting rights

Create bylaws

The bylaws are the rules that govern how the corporation will operate. They should be written in plain language and approved by the board of directors. The bylaws should include such things as:

  • How decisions are made, who makes them, and how often they’re made
  • The fiscal year
  • How many members are required for a meeting of shareholders or directors (a majority is usually best)
  • Whether cumulative voting is allowed (this allows minority shareholders to have greater control over their shares than they would otherwise)

Hold an organizational meeting and elect officers

An organizational meeting is a meeting of the board of directors and its only purpose is to elect officers. The organization must be formed before this meeting can be held. It typically consists of elected officers such as the president, secretary, and treasurer. The full bylaws for your company should be in place at this time so that all those present can review them before voting on any new policies or amendments to existing ones.

Appoint a registered agent

The registered agent is the person or company that agrees to accept legal papers on behalf of the corporation, such as warrants and notices of legal actions against it. The registered agent must be in a similar state and have a physical address too.

The registered agent can be any person or entity that has agreed to act as your corporate representative and whose name is on file with the Secretary of State’s office (where you filed your Articles). If you do not know anyone who fits this profile, there are businesses that provide this service for a fee (usually around $100 per year).

Obtain an EIN from the IRS

You’ll need an EIN if you’re starting a new company, changing your business structure, or adding employees to your company. The IRS provides free EINs by phone and through its website; however, you can also pay someone to obtain one for you.

Once you have an EIN from the IRS, keep it safe in case it’s needed later on—for example, if your S-corporation files an employment tax return (e-file 941) or makes payroll deposits into a federal bank account held at another institution.


The information in this article is only intended to provide general guidance. Do not rely on it as legal advice. Seek professional counsel for any specific situation or question.

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