How to form an S-corporation for Insurance

Introduction

An S-corporation is a type of corporation that provides liability protection for its shareholders. These corporations are treated as pass-through entities for tax purposes, meaning that their income and losses are passed through to their owners’ personal tax returns. This allows the owners of an S corporation to pay taxes on their share of profits at the same rate they would if they owned it directly instead of through a business entity. In some cases, this can mean paying less in taxes with an S-corporation than you would if you formed a regular C-corporation or LLC (Limited Liability Company).

Assemble the necessary documents

• Articles of incorporation. This is the legal document that establishes your business. You can purchase one from an online, or you can draft your own and have it notarized by a bank officer or other authorized person.
• Articles of organization. This is similar to an articles of incorporation, but for LLCs (limited liability companies). If you’re setting up an LLC instead of an S-corporation, download this form and fill it out according to instructions provided by your state’s Secretary of State website.
• Certificate of good standing. This document shows that your organization has been approved by state authorities and is legally operating in its jurisdiction; you’ll need to obtain one before getting started on any other paperwork required by the IRS or state government agencies involved in issuing S-corporation tax ID numbers.

File articles of incorporation with the secretary of state office in your state

The filing fee will vary based on where you are incorporating, but most are under $100. After filing your articles of incorporation, you’ll receive from the secretary of state a copy of your corporation’s articles and an official certificate that shows that it has been incorporated as an S-corporation.

In order for an insurance company to be considered an S-corporation for tax purposes, its board must meet certain requirements related to its structure:

Obtain an employee identification number from the IRS

This will be important in the process of establishing your business as an S-corporation. You can apply for an EIN online or by phone or mail; when applying online, you will need to provide the name of your business and its address.

File the appropriate tax forms

When you have formed your S-corporation, you still need to file the appropriate tax forms. Make sure that the S-corporation is set up to pay estimated taxes throughout the year. You can also set up a separate bank account for paying federal payroll taxes and any other required income taxes.

The company must be a corporation; The corporation’s board of directors must be elected by the shareholders and not appointed by management; and  The shareholders must own at least 80 percent of the stock.

Open a corporate bank account

• Set up automatic deposits from your personal account to the new corporate account
• Set up automatic withdrawals from your corporate account to pay for monthly insurance premiums

Open a bank account for your business

You can use this account for payroll and other expenses related to running the company. If you plan on hiring employees, you will also need to obtain a Federal Employer Identification Number (FEIN), which is similar to an EIN but used by employers instead of individuals. You can also set up an employee retirement plan and a health care account for your business.

Correctly set up for your S-corporation

While it is possible to form an S-corporation on your own, this is not recommended. In order to ensure that you are correctly set up for your S-corporation insurance status, it is best to get help from a professional. Make sure that you follow these steps carefully and have all the right paperwork before proceeding with forming your S-corporation insurance. This means having both the correct bank account information as well as all of the proper documents needed in order for them to accept your application and make it official.

Takeaway

We have covered all aspects of how to form an s corporation for insurance, from filing paperwork with the IRS and state government agencies as well as paying applicable fees before finally registering with the Department Of Labor when necessary; however there are still other considerations that may affect whether or not starting up a new company would be worth it for you at all.

Conclusion

If you are looking to form an S-corporation for insurance, then you should be able to do so. It is important to note that there is a lot of paperwork involved in forming an S-Corporation and filing your taxes as well. There are also certain benefits of doing this type of business structure such as passing loss from one shareholder’s income onto another. Take the time now and find out what it takes before deciding if forming an S-corporation for insurance is right for your company!