How to Form an S Corp in California Step-by-Step || Tutorial How to Create an S Corp DIY

hey this is attorney elizabeth potts weinstein and today we're going to talk about how to form an s corporation in california step by step so in this video i'm going to go through the exact steps of forming a corporation in california and then making the s corp election with the irs to form the corporation in california you go to the website for the secretary of state of california one great thing that we have now in california is you can form corporations online so you go to the website for the secretary of state of california and you go to the online filing section in this online filing section you can file online and also do order things and all kinds of other stuff you can form llc's you can also form corporations so here we're going to form a corporation you don't form an s corp it's not a special thing with a secretary of state you just form a generic corporation and then you elect s corp with the irs later so the first thing they tell you is that it's going to cost 100 bucks and there's a five dollar certified copy fee which i recommend that you do you're accepting the terms of service you can read these if you want it's warning you about the 800 minimum franchise fee so the first thing you're going to do is the corporate purpose statement and name there's a generic purpose statement that cannot be changed for corporations let's just say you can do any lawful act or activity for which a corporation may be formed the important thing here is if you are forming a corporations you can practice a licensed profession like a lawyer or a doctor but it could also be a there's a big list of various other licensed professions you form a professional corporation not a regular corporation this is just a regular corporation now you're going to put in the corporate name and here i'm going to put in i'm making a name so next screen is your business address this is a street address for your company so if you're working from home and your street address is your house you're going to this information you put here is going to be on the public record in a searchable database so you may or may not want that if you don't want to use your home address a po box is not going to work here you have to have some physical location address you can use a co-working space you could also use for some registered agents they let you use their address here so we're going to talk about that in a second but let's just say i'm putting in a address where i have an office this is not my actual address i'm just using a placeholder california 94110 that's not our actual zip code for that place okay is the initial mailing address of the corporation the same as the initial street address here's where you could put the po box i'm not going to but to give you an example just if you put no here then you can put in whatever the actual mailing address is we're just going to say yes to make it simple now you have to put in who is your agent for service of process your registered agent a registered agent is a person or a company that can accept legal documents on the behalf like on your behalf of your company this rarely happens but it's something that you're required to have on file you can do it yourself you can be your own registered agent not the company but you human person can be but that means that your physical location address is public for some of my clients it's totally fine they have an office or some store location but for other people they work from home and they don't want this address public so then they use a another registered agent it could be a person it could be your accountant or something like that but it can also be a service that just provides this most of my clients who do this will use northwest registered agent service that's 125 a year there are under other registered agent services that are less money and or more money sometimes wherever you have a mailbox may provide the service or whether you're if you're renting out space in a co-working space they may provide the service so make sure that you're not already getting this as a benefit of some other service that you have one of the great things about northwest registered agent services is they let you use that address as the location address for your filings with the state of california so here we're going to put whoops northwest registered agent don't just select it here unless you first go to their website and sign up and pay for it now we're going to have to put in the number of shares of the corporation you don't want to put just a few you don't put one or 10 or something like that because even if you're the only owner or there's just two of you or something like that right now you may want to bring in other owners who knows what you're going to want to do with this corporation someday you may sell it so you want to put a large number here so you can later issue more shares to more people so i a lot of times i just put 10 000 shares and i may only issue 100 or a thousand to the initial person the idea is you want to have a large enough number so later on you can issue more shares and divide up the business differently the filing date most of the time you're just going to have the filing date be the current date but if it's really close to the end of the calendar year so it's sometime in december you may want to put january 1st at your filing date especially if you're not actually ready to start the business and help clients or provide services or sell products and the reason is is that in california there's an 800 a year minimum franchise fee it's a tax you have to pay to california even if your business does makes absolutely no money for an llc or a corporation but as corpse and also recently now llcs the first year you're in business you don't have to pay the 800 not the first 12 months the first calendar year so if you form a corporation on december 1st your free year is that month of december if you form it on january 1st your free year is that whole entire new year so if you're really close to the end of the year i recommend putting january 1st otherwise just go ahead and put the current filing date next it gives you a review of everything you already put in so you can make sure you didn't spell anything wrong or have a typo and now you're going to name the incorporator the incorporator is the human person who is filling out this form does not mean that you own the corporation it doesn't mean you have any like liability for what the corporation does it just means you're the human filing this form and that you're saying everything in here is correct to the best of your ability so i'm checking this box as the person who's forming this i'm putting in my name and putting in my email this email is here so you can get the forms when they're accepted the last screen is the payment so the filing fee for a corporation california is currently 100 but then they have this extra 5 certification fee you want this you want a certified copy because you may need to use it with the bank and other people you put in your credit card number and you go ahead and file this obviously i'm not going to submit this right now how long is it going to take for them to review ah so let's go figure out that question if you select business here it's going to open up a new screen where you can click on the current processing dates for business filings today is september 28th when i'm recording this so under corporate filings which is what you're doing under formations and registrations which is what you're doing you're filing it online they are four days behind which is great um four or five days i would say is fairly good and typical sometimes they're a couple weeks behind there's a lot of people who form corporations right around the first of the year so sometimes they can get really behind in that you'll get unless you mess something up in the filing you'll get the date you actually filed it even if it takes them two weeks to process but just be aware that it takes some time online filing is almost always going to be faster you can see that if you file it in person or by mail they're still processing things from three more days before the 21st 24th so the best way to file it is almost always going to be filing online because you're doing all the typing someone else doesn't have to type it and because the online form checks some of the information that you submit so they know that that the information is correct especially like the registered agent and things like that so i highly recommend doing online filing if you have a way to use a credit card to pay the fee but you are not done you do not have an s corporation yet you just have a regular corporation so what do you need to do next the next thing you need to do is get your ein i've already recorded a video about getting eins you can check that out but you're gonna hopefully you'll be able to get your ein online i say hopefully because sometimes people have trouble doing this if you have to put in your legal name and your social security number as the responsible party for your corporation in the filing and so those have to match up either have to have a social security number itin um and if that doesn't match up then you'll have to file it via fax or mail and that will take a really long time otherwise you can you'll get an instant result for getting your ein here the next thing you need to do after you have your ein which hopefully was instantaneous is file the form to be a s corporation as opposed to a regular corporation which is a c corporation you file that with the irs so we go to the page on the irs's website about s corporations it gives you a bunch of information it tells you that you have to have meet certain qualifications to be an s corporation the biggest thing here that comes up for my clients is that you have to either be a us citizen or a legal resident if you are not a us citizen and you reside outside the united states you're not a legal resident in the united states you cannot and you own a shares in this corporation you cannot be an escort that's just the rule i don't know why just like that so the form you have to file with the irs to be an s corp is the form two five five three this is a pdf form it's not really online filing you have to fill out a pdf and fax it in you can mail it also but i highly recommend faxing it because it will get processed faster because you don't have to deal with the mail so what does this form have in it you put in the name of the corporation so we'd have pots weinstein media inc we'd have the ein that we just got which is going to be a number like four six one two three like it's going to be a number like that the street the date you incorporated which is 9 28 20 21 i'm assuming this got accepted the state of calif incorporation is california your city state zip i'm just going to skip that for right now the election is to be effective tax your beginning so this i put in 9 28 2021. most the time if you form a corporation and you immediately want to be an s corp then you're going to put in the date you formed it here but occasionally you're going to form an llc or you're going to form a regular corporation and you're going to change the tax status somewhere along the line so in that case you're going to put in probably january 1st of that year that we where you want the tax status to be different most time you're going to put this date selected tax year usually it's going to be calendar year but occasionally people have different fiscal years the name and title of the officer or legal representative for the irs may call for more information so some human person has to be the contact person for the irs so here i'm putting me and i'm going to put my phone number if you're filing this form late so more than 45 days from when you formed it the corporation then you have to explain that here this is at one of the places where you're going to sign and you're going to be signed here as the officer so i may be the president or the ceo or whatever of the corporation and then you date it this next page is where the owners the shareholders of the corporation have to be personally listed and each of them have to sign to agree to this so here i would be putting thing and then i put my address here i'll be signing and dating it if i'm the only owner then it's a hundred percent of the shares i acquired it the date i formed so uh whoops 9 28 21 my social security number obviously i'm not going to type that for you but you have to give the social security number of each person who owns this so one two three four five six seven eight nine that's obviously not my social security number and then when does my tax year end as a human person my tax year ends at the end of the year so 12 31 month and day most of the other stuff in this form is not going to apply to most people but occasionally it will if you are confused about that you'd have to talk to your tax person or your attorney who's helping you so you also need to sign here so on this form you're signing as the officer the president or ceo or whatever you are and then you're also sending as the shareholder here and dated then i highly recommend you fax this in instead of mailing because it'll get processed faster it's still going to take a while it might take months to get it processed and then you just act as if your business is an s-corporation and fix any problem with the filing later if needs be now there's a lot of other stuff you have to do to set up a corporation you're gonna need bylaws you're gonna be minutes you're gonna need those actual shares that you're gonna be issuing just um other filings to do business license all that kind of stuff but these are the initial documents you need so your corporation exists and so it is a s corporation if you have any questions about what i've talked about today go feel free to ask them down in the comments and i'll try to point you in the right direction thumbs up if you found this video helpful and if you like any more information about running or starting a small business especially the legal questions go ahead and subscribe talk to you guys later bye

Channel: Elizabeth Potts Weinstein

Views: 27,035

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Id: el6uoZ6vKWc

Length: 15min 50sec (950 seconds)

Published: Tue Oct 26 2021