How to Form an S Corporation in Utah

Introduction

The term “S corporation” refers to a special type of corporation formed under Subchapter S of the Internal Revenue Code. There are several key features that make an S corporation different from other corporations. For one thing, only shareholders who meet certain requirements can be shareholders in an S corp. Also, unlike most corporations, owners who are not U.S. citizens or residents do not qualify for this status—and even if they do qualify as shareholders, they cannot be directors or voting members of the board of directors (or even participate in management decisions).

1. Choose a Name for your S Corporation

  • Select a name. Your S corporation must use the same name as your LLC, if you have one. If you don’t have an LLC yet, choose a name that is distinct and not likely to be confused with other businesses in Utah.
  • File articles of incorporation. Submit these documents with the State Corporation Commission (SCC) to begin the process of incorporating your S corporation in Utah. The SCC will send copies to every county clerk’s office for publication in each county where property owned by your business is located—this allows people who are searching for information about your company online or in public records to find it easily and quickly!

2. Designate an Office

The second step to forming an S corporation in Utah is designating an office. You can do business out of your home, but if you want to be a Utah S corporation, then you must have an office somewhere in the state. It doesn’t matter where the office is located or what its size is; as long as it’s in Utah and has a physical address, that’s all that matters for this step. If you don’t have an office when starting out, there are some tax consequences:

You may have to pay higher state income taxes due to not having a permanent location for the business.

3. Appoint Directors

You must appoint at least one director to serve on your board, who may be an employee or a non-employee. Non-employee directors must be at least eighteen years old and cannot be related to you within the second degree by blood or marriage.

4. Prepare and File Form 2553

To form an S corporation, you must complete Form 2553 and submit it to the IRS within 75 days of the date your corporation was created.

The two-page Form 2553 allows you to make several important choices, including:

  • whether or not you want a tax year that ends on December 31;
  • whether or not your corporation will have more than one class of stock; and
  • who will be responsible for any company debts, if any.

Benefits of an S Corporation

Utilizing an S corporation in Utah can be beneficial for your business, offering tax-savings potential, including tax savings on health benefits and other perks that can be deducted as a business expense.

Additionally, an S corporation may provide tax savings on health benefits because an employer can pay for employee benefits out of pre-tax dollars. When you receive such benefits from your employer, you do not need to pay taxes on them when you file your taxes (as long as the benefit does not exceed $50,000).

Conclusion

Forming an S corporation in Utah can be beneficial for your business, offering tax-savings potential and providing you with a range of other perks that can be deducted as a business expense. Remember that your company must have fewer than 100 shareholders, no nonresident aliens among them, and only one class of stock before you can apply for S Corp status. Once it’s official, you’ll need to get an EIN from the IRS so that you can file Form 2553 (Application for Recognition of Exemption Under Section 501(c)(15)) with your state’s Department of Commerce or Tax Commission as well as pay any applicable fees (which differ depending on where they’re located). The good news is that once all this paperwork gets filled out correctly and filed properly at both levels – federal and state – then your S Corp should be able to operate without any problems whatsoever!

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