📅 2026 Update: Key Changes Affecting S Corporations

Since the original article was published, several important changes have occurred that impact the formation and operation of S Corporations. These updates include regulatory changes and new costs associated with business formation. The details below will help clarify how these changes may affect your business decisions.

The earlier article will continue further down the page.

🛡️ Corporate Transparency Act Exemption

On March 26, 2025, a significant change took place regarding the Corporate Transparency Act. The Financial Crimes Enforcement Network (FinCEN) announced that U.S.-formed companies and U.S. persons are now exempt from beneficial ownership reporting requirements. Only foreign-formed entities registered to do business in the U.S. need to file these reports.

This change simplifies compliance for many domestic businesses.

💵 Current State Filing Fees

As of 2026, state filing fees for articles of incorporation typically range from $50 to $300. This cost may vary based on the state and the number of authorized shares. It is essential to budget for these fees when planning to form an S Corporation.

⏱️ Processing Times

Standard processing times for business formation filings can vary greatly. They range from a few business days to several weeks, depending on the state and the volume of filings. For those looking to speed things up, many states offer expedited processing.

This can shorten the turnaround time to as little as same-day service for an additional fee.

📋 Steps to Form an LLC

To form an LLC, which is a common structure for S Corporations, you typically need to take several steps. These include choosing a compliant business name, appointing a registered agent, filing articles of organization with your state, drafting an operating agreement, and applying for a federal Employer Identification Number (EIN). The cost of LLC formation varies, with state filing fees ranging from $40 to $500.

📌 Key Takeaways

  • 🛡️ Domestic companies are exempt from beneficial ownership reporting.
  • 💵 State filing fees for articles of incorporation range from $50 to $300.
  • ⏱️ Standard processing times can take days to weeks.
  • 📋 Forming an LLC involves several steps, including filing articles.
  • 📋 The cost of LLC formation varies widely by state.

💡 Tips for Starting an S Corporation

When considering starting your business, it's important to review your specific situation with an attorney. Each business has unique needs and challenges.

🏷️ Choose Your Business Name Wisely

When selecting a name for your S Corporation, ensure it complies with state rules. Most states require the name to include a designator like “Inc.” or “Corporation.” This helps clarify your business structure to customers and partners.

📄 File Articles of Incorporation

To officially form your S Corporation, you'll need to file articles of incorporation with the appropriate state agency. This document includes key information about your business and establishes its legal existence.

👥 Appoint a Registered Agent

A registered agent is essential for any S Corporation. This person or entity will receive legal documents on behalf of your business. Ensure your registered agent is reliable and available during business hours.

🏦 Apply for an EIN

An Employer Identification Number (EIN) is necessary for tax purposes. You'll need it to open bank accounts, hire employees, and file taxes. Applying for an EIN is straightforward and can often be done online.

📈 Consider Expedited Processing

If you need to form your S Corporation quickly, consider using expedited processing services. Many states offer this option for an additional fee, allowing your business to start operating sooner.

🌍 Utilize Free Resources

Take advantage of free resources available from organizations like the Small Business Administration (SBA) and SCORE. These organizations offer guidance on business formation and compliance without any cost.

🏆 Business Formation Services Ranked by User Reviews (2026)

The following services are prominent for business formation and related tasks. They offer different features and benefits that align with establishing and running an S Corporation. The order here is based on Trustpilot data checked in October 2026, and scores can change over time.

Ratings should be viewed as just one indicator, as unhappy customers tend to leave more reviews, which can skew perceptions.

🥇 1. Inc Authority

Inc Authority has been rated 4.8. It is known for providing no-cost Secretary of State registration, as well as business credit and funding services. However, some users report upselling of additional services, which may not suit everyone’s needs.

🥈 2. Bizee

Bizee holds a score of 4.8. This service specializes in LLC formation, registered agent services, and compliance services. While Bizee is appreciated for its offerings, it is worth noting that the availability of legal advice is limited, and it is not classified as a law or accounting firm.

🥉 3. Rocket Lawyer

Rocket Lawyer has a Trustpilot score of 4.5. It is well-known for its legal document creation and business formation services. Some users have found the subscription model to be complex, and there may be a learning curve involved.

4️⃣ LegalZoom

LegalZoom has been rated 4.6. It offers a variety of services, including business formation and registered agent services. Reviewers have mentioned occasional delays in processing times and issues with customer support responsiveness.

🆓 Free Government and Nonprofit Help

Free resources are available to assist with business formation. Organizations like the Small Business Administration (SBA) and SCORE provide guidance and support without any charge. Many state governments also offer information on filing fees and compliance.

🔎 What to Compare When Choosing a Service

  • 📝 Service offerings: Check what services are included.
  • 💰 Pricing: Look for transparent pricing with no hidden fees.
  • ⏳ Processing times: Consider how quickly you need your documents filed.
  • 🛠️ Customer support: Assess the availability and responsiveness of help.
  • 🌍 User reviews: Read customer feedback for real-world insights.

❓ Frequently Asked Questions

❓ What is an S Corporation?

An S Corporation is a special tax designation for corporations. It allows profits to pass through to shareholders, avoiding double taxation.

💼 How do I start an S Corporation?

To start an S Corporation, file articles of incorporation with your state, appoint a registered agent, and obtain an EIN. Ensure you meet eligibility requirements for S Corporation status.

📊 What are the benefits of an S Corporation?

S Corporations offer limited liability protection and pass-through taxation, which can reduce the overall tax burden for shareholders.

📝 Do I need to hold annual meetings?

Yes, S Corporations must hold annual meetings and keep minutes to comply with state regulations and maintain good standing.

🏦 How can I raise capital as an S Corporation?

S Corporations can raise capital by selling stock to shareholders. However, they are limited to a specific number of shareholders, which can affect fundraising options.

📅 What are the deadlines for filing taxes as an S Corporation?

S Corporations must file their taxes by March 15 each year. Extension requests can be made if more time is needed.

⚖️ Recent Cases Related to S Corporations

Recent court rulings have clarified various aspects of S Corporations, including tax implications and compliance requirements. These cases help businesses understand their legal standing and responsibilities.

For more recent rulings, you can browse more rulings on the news page.

End of October 2026 Update





The major factor which separates an S corporation from other types of corporations is the manner in which the corporation is taxed by the Federal Government. The income of S corporations is divvied among the shareholders according to their actual number or percentage of shares in the company and then that shareholder must report the income on their individual tax returns. S corporation advantages include the lack of taxation on the profits of that company.



In contrast with a C corporation, which includes double taxation at the point of the company and the shareholder, S corporation advantages include singular taxation at the point of each individual shareholder. S corporation shareholders also enjoy limited liability for the actions of the corporation because S corporations are individual entities, separate from the individual shareholders.



If, for example, there were three shareholders of an S corporation, each would receive dividends according to their percentage of ownership of shares in that corporation. That money would be distributed pre-tax to each employee and/or shareholder. Each of those individuals who make up that S corporation would then be responsible for the taxes on their dividends.

Look Into S Corporation


While S corporations are taxed, it only occurs one time, whereas many corporations receive double taxation: once on their profits and then again when the money is distributed. However, S corporations also enjoy the limited liability offered to many other corporations as an added benefit.




What is an S-Corporation?




An S-corporation is a business entity that, according to the United States Federal income tax law, is specially taxed by the Internal Revenue Service. An S-corporation, through this special taxation, is not forced to pay any Federal income taxes to the United States Government. That being said, an S-corporation’s income, debts, or losses are divided and passed onto its shareholders.




Through this division, the shareholders then must report the income or capital losses on their individual income tax returns. This concept, known as single taxation, enables an S-corporation to achieve a unique taxation model which will limit liability through the presence of diversified liability. In other words, the investors in the company face taxation liability concerning the company’s gains or losses.




When a company obtains S-corporation status, they are permitted to utilize a partnership taxation model. This taxation structure offers protection from creditors and spreads liability to individual investors.




All rules and regulations concerning an S-corporation are outlined in Subchapter S of Chapter 1 of the Internal Revenue Code. An S-corporation combines the legal implication of a C-corporation with the United States Federal income taxation model applied to that of partnerships.




Similar to a C-corporation, an S-corporation is considered to exist as a traditional corporation under the law of the particular state in which it is organized. That being said, S-corporations are separate legal entities from their shareholders and, through these specific state laws, will generally provide their shareholders with the same liability protective measures awarded to shareholders of C-corporations.




In regards to the Federal income tax levy, an S-corporation resembles a partnership. Similar to a partnership, all income accrued, all deductions realized, and all tax credits associated with the S-corporation will flow through (annually) to the shareholders of the entity. As a result of this characteristic, income earned by an S-corporation is taxed at the shareholder level and not at the corporate level.



 


How to Receive S-Corporation Status




To receive S-corporation status, the entity must be eligible and regarded as a domestic corporation, a limited liability company. This means the company must be elected to be taxed as a corporation. The underlying entity must possess only one class of stock. The entity must possess at least 100 shareholders—all spouses or families are typically regarded as a single shareholder. The shareholders must be legally recognized as citizens of the United States.




Additionally, the shareholders must be natural persons. This will exclude corporate shareholders and partnerships for shareholder consideration. All profits and losses incurred by the entity must be allocated to shareholders in proportion to each individual’s interest in the business’ operations.




If the underlying entity meets the aforementioned qualifications, it must file Form 2553, titled “Election by a Small Business Corporation” with the Internal Revenue Service. The form must be completed and signed by all of the entity’s shareholders and the election to finalize the corporation must be made by the 15th day of the third month of the taxable year in which the election was held.