Start an Indiana S Corp

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Indiana corporation

There are many ways to run your business. Of your many options, conducting your business as an S Corporation could be ideal. An S Corporation isn’t a formal business entity, it’s a federal tax designation approved by the Internal Revenue Service. This tax designation allows income, losses, credits, and deductions to pass through your business and onto its shareholders for taxation at their personal income tax rates.

Start an S Corp in Indiana

Choosing an S Corporation means taking extra steps after formation. To secure an S Corp election, business owners must first start their enterprises at the state level, usually via a corporation or limited liability company (LLC). Then, they can choose to file for S Corporation status at the federal level.

How to Set Up an S Corporation in Indiana

If you’re struggling with how to start a corporation or a limited liability company (LLC), we can help you navigate these processes. You can use our Indiana LLC Formation Service and Indiana Corporation Formation Service for speedy formation help, but once we help you get started, we have other services to keep your business running smoothly. We have an extensive series of formation and state compliance services that can help you reach your business goals. 

1. Choose a Business Name

You can take a lot of different approaches when naming your business. You don’t have many constraints when choosing a business name, but the name normally must: 

If you have the proper consent, sometimes you can use a name that isn’t distinguishable from another in the SOS’s records. 

2. Appoint a Registered Agent in Indiana

Your Registered Agent plays a vital role in keeping your business in good standing with the state. They are responsible for accepting important legal and official correspondence on your business’s behalf. If you need one, our Registered Agent Service can help you locate a qualified agent in Idaho.

3. Choose Directors and Officers or Managers

Good businesses need good leadership. If you start a corporation in Indiana, you need to have a Board of Directors and at least one officer to handle and oversee your business’s affairs. If you start an LLC, your members can manage the business, or you can choose managers for the business. 

4. File Articles of Incorporation/Organization with the Secretary of State

Articles of Incorporation and Articles of Organization are documents you file with the Secretary of State to begin corporations and LLCs, respectively. When you file this paperwork, you normally need to pay an accompanying fee. 

5. File Form 2553 to turn your business into an S Corporation

To make your Indiana business an S Corporation, you need to do some additional paperwork. One of the main Indiana S Corp filing requirements is submitting Form 2553 to the IRS. If you run an LLC, you first need to file Form 8832 with the IRS to give your business a corporation status, and then you file Form 2553 for S Corporation status. 

S Corporation requirements and limitations

There are many limitations on how you can run an S Corporation. In general, a business that wants S Corporation status must:

For you, the benefits of running an S Corporation might outweigh the disadvantages, but you’ll probably want to speak to legal and financial experts about your needs and options before deciding on whether to run your business as an Indiana S Corp. 

Pros and cons of creating an S Corporation

Sometimes a good, old-fashioned list of pros and cons can help you make successful business decisions. It’s best to speak to legal and financial professionals about the unique benefits and disadvantages of running your particular business as an S Corporation, but we can help you get a basic start with the exercise. 

Pros

There can be many advantages to running an S Corporation, including:

Depending on the nature of your business, these benefits might far outweigh any drawbacks that come with electing to be an S Corporation.

Cons

There can be disadvantages to deciding to run an S Corporation as well, including:

Once again, the advice of legal and financial professionals can help you determine if these disadvantages are more or less significant compared to the benefits. 

What to know before creating an S Corporation in Indiana

If you start an Indiana corporation, it’s a C Corporation by default until you file paperwork to make it an S Corporation. The tax liabilities and requirements for S Corporations compared to C Corporations can be wildly different, so it’s important to know what they are before making the switch.

What is an S Corporation?

So, what is an S Corporation anyway? An S Corporation is basically a tax designation for certain kinds of businesses. 

What’s the difference between an S Corporation and a C Corporation? 

There are a lot of differences between S Corporations and C Corporations, including the fact that C Corporations can have more corporation shareholders and classes of stock than S Corporations. But many entrepreneurs focus on the difference in tax liabilities between S Corporations and C Corporations.

In general, C Corporations are subject to double taxation. In this context, double taxation means that a C Corporation must pay taxes for its income on the corporate level, and then the C Corporation shareholders must pay income taxes on their distributions from the corporate income. 

On the other hand, S Corporations enjoy pass-through taxation, meaning that the business entity doesn’t pay income taxes; rather, only the shareholders pay taxes on their share of the income. Tax liability for S Corporation income “passes through” the business and onto its shareholders. 

What are the requirements to create an S Corporation?

A business must operate within the limitations we identified above and file Form 2553 with the IRS to become an S Corporation.  

Can LLCs choose an S Corporation Election?

Yes, LLCs can become S Corporations if they fulfill each filing requirement for the election. Many LLCs elect this status for tax benefits, including more favorable self-employment taxes. Visit our Tax Information for LLCs page for more details on your potential tax obligations as an LLC owner. 

How We Can Help

If you’re ready to start an S Corporation, we’re here for you. We can help business people seeking to form LLCs with S Corporation status through our S Corporation Formation Service. We can also support a variety of businesses from start to finish with our many formation, compliance, and maintenance products. We work to support the entrepreneur in you and help make running your business easier. 

Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

FAQs

  • What are the benefits of creating an S Corporation in Indiana?

    For many, the big benefit of starting an S Corporation is the ability to enjoy pass-through taxation (and other tax benefits) while raising capital through numerous shareholders and enjoying asset protection.

  • How should I choose a name for my Indiana S Corp?

    Choosing a good and relevant business name can be crucial to the health of your business. Fortunately, there aren’t a lot of legal restrictions around choosing a business name. Your business name needs to be distinguishable from other names on record with the Secretary of State and contain proper language identifying it as an LLC or a corporation. Otherwise, the choice of name is generally yours.

  • Should I identify my LLC as an S Corporation?

    If you choose to run your business as an S Corp, you should identify your LLC as an S Corporation by filing the appropriate paperwork with the IRS and the Indiana Department of Revenue.

  • How should I calculate taxes for my S Corporation? 

    A tax professional can help you determine the best way to calculate taxes for your S Corporation.

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