West Virginia S corporations (S Corp) offer the familiarity of the traditional corporate management structure together with the pass-through income tax treatment of partnerships, two benefits that may make it a great choice for you. We can help you form your business in the Mountain State with our easy-to-create S Corporation service.
Although an S Corporation sounds like a distinct business entity, it isn’t. It’s a tax designation you choose for a business you’ve already formed. Giving your business S Corporation status can offer it tax perks it might not normally have. An S Corporation often starts as a limited liability company (LLC) or standard business corporation. We can help you establish this basic underlying structure with our West Virginia LLC Formation Service or our West Virginia Corporation Formation Service.
We offer other services, such as developing a business plan, reserving your business name, and obtaining a tax identification number. In this guide, we will discuss the straightforward steps to get your S Corp established and the pros and cons of having an S Corp.
A West Virginia S Corporation is itself not an entity but rather springs from an established C Corp or LLC. As a tax election under Subchapter S of the Internal Revenue Code, an S Corp must attach to a foundational entity (i.e., your C Corp or LLC). As such, you first need to create a standard corporation or an LLC on which your S Corp can stand. Follow these West Virginia S corporation requirements to create your C Corp or LLC foundational entity:
You have a lot of options when it comes to choosing your business name, provided that it conforms with a few state requirements. You can check name availability for your corporation or LLC with the Secretary of State’s office and can reserve one.
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File Articles of Incorporation or Articles of Organization for your LLC with the West Virginia Secretary of State. These are the basic business-forming documents for your business entity. When you file one of these documents, you normally need to pay an accompanying filing fee.
Form 2553 is what makes your foundational entity (corporation or LLC) into West Virginia S Corp. Before doing any filing with the Internal Revenue Service be sure to review the instructions for the form to make sure you meet the S corporation filing requirements. Lastly, check that you satisfy the tax filing and registration requirements for West Virginia.
Without filing Form 2553 your business entity will default to C Corp status. That said, if you properly file the form with the IRS, your West Virginia S Corp will be formed. Bear in mind that S Corps have certain limitations imposed by the IRS when they are created from a C Corp. The following are the IRS restrictions on S Corps when the foundational entity is a C Corp:
The benefit of properly creating your S Corp with the Internal Revenue Service is that it retains the limited liability protection of a C Corp but has the pass-through tax treatment of a partnership.
Once you commit to a foundational entity, that decision will last for the life of your business. As such, we have created a list of pros and cons to help you weigh your decision about creating an S Corp.
We offer additional information in our different business structures guide. In that guide, we get further into the nitty-gritty and flesh out some other considerations that might help you.
When you create a business corporation in West Virginia, it’s a C Corporation by default until you make it an S Corporation. C Corporations and LLCs might miss out on certain tax benefits if they don’t elect S Corporation status. However, your business has to follow certain rules before it can become a Florida S Corp.
If an S Corporation is the right choice for you, you need to choose when to file the form. You normally have only two times you can file it, and they are:
Sometimes you can file it late, but that often requires additional paperwork and proof that your late filing was due to a reasonable cause.
When you file an S Corp tax election with the IRS it is treated as a partnership rather than a C Corp for federal tax purposes. That said, your S Corp still retains all the benefits of a traditional C Corp, but also gets the benefits of a general partnership (e.g., pass-through taxation). But the differences between an S Corp and a C Corp don’t stop there. Following are other important differences between S Corps and C Corps:
Further, all S Corps start as C Corps. To change over to an S Corp, you need to file Form 2553 with the IRS. This form will elect partnership tax treatment rather than traditional corporate tax treatment for your S Corp.
To form an S Corporation, you have to operate within the limitations we listed above and file the proper paperwork. In addition to the basic state filings for all corporations and LLCs, the main part of your West Virginia S Corporation filing requirements is submitting Form 2553 to the IRS.
To properly submit this form, your business needs to have an Employer Identification Number (EIN). We can help you get your EIN in next to no time with our Employer ID Number Service.
Absolutely. You can elect S Corp tax treatment for your West Virginia LLC so long as it qualifies under the IRS guidelines. The most common reason an LLC makes an S Corp election is for self-employment tax treatment. For further information on why an LLC would choose S Corp tax treatment, we encourage you to review our discussion on LLC tax treatment.
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Creating a West Virginia S Corp takes advantage of the limited liability of a C Corp while also creating the benefit of pass-through taxation of a partnership.
You do not need to identify your LLC as a West Virginia S Corporation. Provided that you are following the West Virginia name restrictions regarding the use of “LLC” or “limited liability company,” you should not need to make any further disclosures.
Generally, a corporate name should be professional and something you can live with for the life of the business. Also, consider a name that has little to do with the company’s line of business to preserve some corporate privacy (e.g., WVO Farms, Inc. v. West Virginia Organic Farms, Inc.).
You calculate your S Corp taxes with your personal income tax rate. Review the specific requirements with both the IRS and the West Virginia Department of Taxation to make sure you comply.
Your tax professional can advise you on this highly specialized area.
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.
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