A sole proprietorship is the simplest business structure to establish. In many cases, a new business owner does not have to file any paperwork to become a sole proprietorship. But if you decide to change over from a sole proprietor to an S corporation, you must complete a few key steps. An S corp is a common choice for a company that wants to operate as a corporation but avoid the need to file a separate corporate tax return.
Instructions
1. Ensure that you meet the minimum requirements to change to an S corporation before you start this process. The basic requirements include U.S. citizenship or residency, and a limit of no more than 100 shareholders for the company.
2. Register as a corporation with your secretary of state's office. You must fill out registration paperwork providing information about the business type and owners then file articles of incorporation with the state to become an official corporation. Keep in mind when writing your articles of incorporation, by-laws and other corporate documents that you can have only one class of stock when forming an S corp.
3. Fill out IRS Form 2553 (Election by a Small Business Corporation). It asks for basic information about your election to become an S corporation. Sign (along with any other shareholders of the corporation) and send the form in with additional paperwork as required.
4. Receive confirmation of your status in the mail to confirm that you are now an official S corporation.
