Choosing to form a Virginia S corporation is an important decision for small businesses. It may save them taxes, but the process is complex. High-quality filing services can help them avoid costly mistakes and complete the required forms quickly. They can also ensure that they comply with state requirements and accomplish federal obligations.
Before making the election, a company should consult a tax professional to learn about the benefits and drawbacks of S corp status. Virginia S corporations have restrictions on the number of shareholders and who can be shareholders, including nonresident aliens. They can issue only one class of stock and are ineligible to be banks, insurance companies, or domestic internal sales corporations. They are also subject to a franchise tax in some states. The main benefit of an S corp is pass-through taxation, which means that only the shareholders pay taxes on their shares of income.
In order to file for an S corporation, a company must have a registered agent with a physical address in the state of Virginia. It must also submit an initial report and pay the filing fee. The report must include the registered agent’s name, address, phone number, and registered agent’s date of incorporation. In addition, the company must have a federal and state ID number and file its taxes.
How to Form a Virginia S-Corp?
A Virginia S corporation is a business entity that enjoys certain tax benefits. To qualify for this designation, your business must meet the federal and state requirements. It also must have a registered agent in the state. This person or company will receive legal notices and business mail on behalf of the company. If filling out tax forms, adding up deductions and credits, and calculating “reasonable salaries” is not your strength, consider working with a business accountant.
The first step in forming a Virginia S corporation is filing your Articles of Incorporation with the state. You can file the documents online or by mailing or faxing them to the state agency. You must also obtain a federal tax identification number, which is used for hiring employees, opening a bank account, and filing taxes. Bizee provides this service as part of our incorporation packages, and it is free for the first year (then $119 per year after that).
Once you’ve completed the incorporation process, your next step is to set up your company’s management structure. This includes drafting corporate bylaws and holding an organizational meeting. The bylaws will establish the company’s operating procedures, management, and structure. The meeting will also elect board members and appoint officers, such as the president and secretary.
You must also create a corporate book, which is where all your company’s financial transactions will be recorded. The book will include a par value of each share of stock, which is the minimum dollar amount for which a share can be sold. The board of directors will be responsible for issuing shares and recording issuances in a stock ledger.