An S-corporation (sometimes referred to as an S-Corp) is a special type of corporation created through an IRS tax election. An eligible domestic Texas corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S-corporation.
Before being able to send in such an election, you must first form a regular Texas corporation. According to the IRS, S-corporations are “considered by law to be a unique entity, separate, and apart from those who own it.” This limits the financial liability for which you (the “officer” or “shareholder”) are responsible. Nevertheless, the liability protection is limited. S-corporations do not necessarily shield you from all litigation such as employee legal actions as a result of a workplace incident.
What makes the Texas S-corp different from a traditional Texas corporation (C-corp) is that profits and losses can pass through to your personal tax return by way of Schedule K-1s. Therefore, the S-corporation is not taxed itself. Only the shareholders are taxed. There is one important thing, any “active shareholder” who works for the Texas S-corporation must pay him or herself a “reasonable compensation.” Basically, any active shareholder must be paid a fair and reasonable salary, or the IRS might re-classify any additional corporate earnings as “wages.”
Once you have set up a regular Texas corporation (C-Corp) with the State of Texas, to become an S-Corp you must make an election with IRS in order for your corporation to be recognized as an S-corporation. This form is called IRS Form 2553. It must be filled out and faxed or mailed to IRS. Once IRS has processed the form you will receive written confirmation by mail stating your S-Corp status has been confirmed.
Texas S-Corp Filing Service is one-time $375 and includes:
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REMEMBER, ONCE WE SET UP YOUR INITIAL TEXAS CORPORATION THEN YOU WILL NEED TO FILE IRS FORM 2553 TO COMPLETE THE S-CORP STATUS ELECTION.
Assumed Name Certificates:
These are DBA’s placed under your Texas corporation and we process them for $75/each.
Texas Comptroller of Public Accounts office filing requirement by May 15th of every year:
Texas Franchise Tax Return
We provide this as a separate service for only $75/return.