How to form an S-corporation for Paints


The S-corporation is a popular option for small businesses that want to limit their liability and pass corporate income, losses, and deductions through to their shareholders for federal tax purposes. The IRS requires an S-corporation to file a separate tax return.

S-corporations is simple!

If you are starting a business and want to form an S-Corporation, follow these steps:

  • Choose an appropriate name for your business
  • Obtain at least two shareholder signatures on Articles of Incorporation or Certificate of Organization, as appropriate
  • File Articles of Incorporation/Certificate of Organization with the state where your business will be located

Choose a corporation name that has ‘Inc.’, ‘Corporation’, or ‘Company’ in its name

Your corporation name should be a combination of your first, middle and last names. The name can then be abbreviated to initials. For example: Smith Inc. could be referred to as SMI or Smith Company Incorporated might be shortened to SMCI. Make sure that the initial letters are not already in use by someone else-you don’t want your company name ending up in court!

You also need to avoid choosing one that is too similar to another business’s trademark, even if it does not sound similar when spoken aloud.

Incorporate in the state you desire to do business in!

Corporations are created by state law, so you need to check with the secretary of state in the state where you will do business. Some states have minimum capital requirements and others do not.

It is generally recommended that if a corporation’s assets are valued at more than $10 million, it should be an S-corporation rather than a C-corporation.

As a shareholder of the company, you must hire yourself as an employee and pay yourself a regular wage

This is necessary because you are not considered an independent contractor but rather an official employee of the corporation. By doing this, you will be required to pay payroll taxes and file a W-2 form each year along with Form 1099s for any subcontractors who may have worked on your project.

The IRS requires an S-corporation to file a separate tax return

This is necessary because S-corporations are taxed as pass-through entities, which means that the income and losses of the corporation are passed through to the shareholders.

There must be no more than 100 shareholders in the company

  • The IRS has strict rules about how many shareholders a corporation can have. A corporation with more than 100 shareholders is required to be an S-corporation, but a corporation with fewer than 100 shareholders may elect to become an S-corporation.
  • The limit is not based on the number of employees or the amount of revenue.

Forming an S-corporation is not just advantageous for taxes

  • It also protects your personal assets if someone decides to sue you or your business.
  • An S-corp’s income is passed through to the shareholders; they then pay taxes on their share at their personal rate (or possibly at lower rates). As such, it’s not necessary for an individual shareholder(s) to file corporate taxes and don’t need any special licenses or permits either!
  • An S-corp’s losses are passed through to shareholders, who may offset them against their other sources of income—and even claim them as deductions on their personal federal tax returns if possible under rules governing loss carryforwards.

Forming an S-corporation will protect you from some liability issues – but it’s important to understand what other responsibilities it creates for the business owner

So you’re interested in forming an S-corporation for your paint business, but before you dive in headfirst, it’s important to understand what this type of structure will mean for your company.

S-corporation owners have limited liability protection – which means that if the company ends up being sued and can’t pay its debts out of its own pocket, only the assets owned by the business (not those owned personally) can be taken away by creditors. The other shareholders’ personal assets generally cannot be seized unless they were involved in illegal activities committed by the business.


Forming an S-corporation allows one person or group of people who want limited liability protection over their business ventures without having any solid ownership stake beyond this type of legal entity itself within another corporation or LLC structure; however there are some responsibilities required by federal law for all businesses operating within United States jurisdiction regardless whether they’re situated domestically.


In conclusion, forming an S-corporation is a great way to protect yourself from liability issues and reduce your taxes. However, it’s important that you understand the tax implications of this decision as well as any additional responsibilities it may create for you as the owner.

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