How to form an S-corporation for Telecommunications


In the telecommunications industry, you need to protect your business from liability and maximize your profits. One way to do this is by forming an S-corporation and operating as a limited liability company LLC. The process of forming an S-corporation takes time, but it’s worth the effort. This guide will walk you through every step of setting up your own telecommunications S Corp.

Choose an S-corporation Structure for Telecommunications

It’s important to take note of the following:

  • An S Corporation is a pass-through entity. That means that your income stream from your telecommunications business will be taxed at the individual level, versus being taxed on the corporate level. This can make it easier to manage your taxes and keep better track of them, as well as provide some tax benefits for you.
  • S Corps are not subject to double taxation (that is, they’re not taxed twice). If an S Corp has more than one shareholder then all profits must be distributed among shareholders (unless reinvested in the company) which minimizes or even eliminates any potential double taxation issues that may arise with an LLC or other type of corporate structure.

Form an S-Corporation

To create an S-corporation, you’ll need to file with the IRS and obtain a federal tax ID number. To do this, you’ll need to submit Form 2553 to the IRS and pay $55. You can find all of the necessary forms on the IRS website or in person at your local franchise tax office (FTO). If you’re creating a corporation with multiple owners or shareholders, they will also have to file their own Form 2553s using their Social Security numbers instead of your business’s federal tax ID number—but keep in mind that only one person needs to be designated as “president” for legal purposes; more information about how this works is available on our blog post about how S-corporations work.

Register Your Company

Registering your company with state government agencies depends on whether you want them involved in overseeing its operations or not: if not, just go ahead and complete everything above.

Choosing a Name for an S-corporation

You can also choose a fictitious name (like “ABC Inc.”) that doesn’t correspond to anyone’s real name. Finally, if you’d like to trade under an assumed business name (or DBA), that works too—as long as it isn’t already being used by another entity in your state or county and doesn’t match another corporation on file with the IRS.

Set up Tax Identification for an S-corporation

Once you’ve formed an S-corporation, you’ll have to set up tax identification. In order to do so, you’ll need to obtain an Employer Identification Number (EIN).

The EIN is a unique nine-digit number assigned by the IRS that identifies your company as a business entity. If you already have this number (for example, if you are already filing corporate tax returns), then there’s no need for further action. Go online and register for an EIN here or call.

Create Bylaws for an S-corporation

They should be created at the time you form your entity and can be amended later if needed.

It is important to note that there are specific requirements for these bylaws, including:

  • The purpose of the company (to provide telecommunications services)
  • How many directors you will have on your board
  • How often those directors will meet and how they can be removed

Obtain Licenses and Permits for an S-corporation

In some states, you may need to obtain a business license or other permits in order to operate your telecom company. For example, if you are a telecommunications services provider, you might need an FCC license to conduct interstate or international communications. If your business is involved in the sale or installation of cable systems, you might need a franchise from the city government. You may also be required by local building codes to get permits for work done on commercial buildings. Check with your state’s department of commerce for more information about licensing requirements for corporations in your industry.

Open a Bank Account for Your S-corporation

Once you’ve determined what type of bank account you want to open, it’s time to visit the branch of your choice. Bring along the following items:

  • identification (driver’s license or passport)
  • business license (if applicable)
  • proof that you are opening a business checking account (these vary by institution)


The S-corporation is the best structure for telecommunications businesses. They are easy to form and maintain, offer a lower tax burden than other types of corporations, and protect the owner from personal liability in most cases. If you have any questions about what type of business entity you should choose or how to form one, contact an attorney today!

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