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You’ve been dreaming of opening your own restaurant for years. You know the food you’ll serve, and you want to create a dining experience that will make your customers’ mouths water. But how do you set up your business? If you’re considering an S-corporation, this article will help guide you through the process of starting an S-corporation and getting it ready for success!
An “S” corporation has made a special election with the IRS to be taxed as a pass-through entity. That is, the income and losses from the business are passed through to shareholders and reported on their personal tax returns. S corporations can only have one class of stock and that class must consist exclusively of common shares. The shareholders must be individuals, trusts or other businesses that have elected to be taxed as an S corporation.
One of the main benefits of forming an S-corporation is that it affords you the ability to pass on your business to your heirs. Unlike other types of businesses, there is no double taxation in S-corporations; therefore, dividends are not taxed when they are paid out to owners and shareholders.
This means that after you’ve worked hard building up your company, your beneficiaries will be able to inherit its assets without having to pay any more taxes on them than they would if they were simply inheriting money (or other property).
If you’re opening a restaurant, then you’ll want to form an S-corporation. An S-corporation is the best business entity for most restaurants because it:
This is the tax ID number that identifies your company. You can get it by filling out Form SS-4, Application for Employer Identification Number and submitting it to the IRS. Your EIN will be mailed to you within five business days of filing the form.
The federal government charges $5 per applicant for a new EIN; however, many states will charge additional fees for obtaining their own state version of this number.
Articles of incorporation are the first step in forming an S corporation. The articles should include the name of the corporation, its location, and its registered agent.
The articles must be signed by all shareholders who will own at least 25 percent of the shares after incorporation. If you have more than one owner, each should sign a separate copy; then you’ll need to send all copies to your state’s secretary of state office within 90 days after incorporating.
At these meetings, you’ll need to record minutes of all actions taken by the board of directors. These minutes must include:
Corporate records are the legal documents that establish an S-corporation and show its existence, such as its charter, bylaws, minutes of meetings and resolutions. You should also keep any other documents related to your business, including contracts for services or products such as food or equipment.
In addition to these specific corporate documents, you should also keep any receipts from purchases made on behalf of the corporation. It would be helpful if you could organize all of these receipts in order.
There will be times when you need access to records pertaining to specific transactions within your company’s history—and having them organized makes this task much easier!
You can learn more about how to form an “S” Corporation by visiting the IRS website or hitting our website for more knowledge!
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