Incorporation Lawyer for Illinois Corporation Formation

Are you considering forming a corporation for your new business endeavor?  If so, as an Illinois incorporation lawyer, I can help you with all aspects of legally creating your corporation, including:

• Drafting articles of incorporation
• Drafting bylaws
• Drafting subscription agreements for the transfer into the company of assets in consideration for shares of stock
• Drafting initial minutes or consent action to elect officers, accepting subscription agreements, and, if desired, electing sub-chapter S taxation
• Drafting the authorizations that will be needed by a bank to open checking accounts
• Drafting “Buy-Sell” of shareholder agreements
• Reviewing leases
• Drafting or reviewing contracts
• Assisting with other business formation matters

What is a Subchapter S Corporation?  Should I have a Subchapter S Corporation?

A subchapter S corporation is a “regular” corporation that has elected to be taxed as a “passthrough” entity. This means that the corporation itself is not taxed, and the profits and losses of the corporation are “passed through” to the owners based upon their percentage of ownership.

As an example, assume that there is a corporation with a single owner, and the corporation has a net profit of $100,000.  If the subchapter S election is made, the corporation is not taxed at all, and the owner would be taxed for the full $100,000 on their personal tax return.

If a subchapter S election is not made, the corporation would be taxed on the $100,000 profit.  If the corporation then paid a dividend to the owner of $10,000, which would be in addition to any salary, the owner would then be taxed on the $10,000 dividend.  Because there are two levels of taxation, owners of non-subchapter S corporations are said to be subject to “double taxation.”

Are There Requirements for Subchapter S Election?

Yes. 

There are limitations regarding who can be shareholders, the number of shareholders, passive income limitations, and other requirements and limitations.  In most cases, these limitations will not prevent most new business owners from choosing to be taxed under subchapter S.

How is Subchapter S Set Up?

In general, a corporation must first be formed.  Then, the owners of the company will elect to be taxed as a subchapter S organization, and a filing must be made with the Internal Revenue Service.  As an incorporation lawyer, I can help with both the incorporation and with preparing and making the subchapter S filing with the IRS.

Is a Subchapter S Corporation Right for You? Call Me to Get Started.

I can meet with you to explain the differences between the various business forms allowed under Illinois law, and explain the advantages and disadvantages of each. I can do this once I understand the aspects of your business and your goals.

I would invite you to call me to get started.