📅 2026 Update: Changes Affecting S Corporations and Business Formation

Since the original article was published, several important updates have occurred that impact S corporations and business formation. These changes include new exemptions under the Corporate Transparency Act and updated fees for state filings. The following sections will detail these updates and continue the discussion found in the article below.

🆕 Corporate Transparency Act Updates

On March 26, 2025, the Financial Crimes Enforcement Network (FinCEN) issued a significant rule change. This interim rule exempts all U.S.-formed companies and U.S. persons from beneficial ownership reporting requirements. Now, only foreign-formed entities that wish to do business in the U.S. must file these reports.

This change simplifies compliance for domestic businesses.

💰 Current Filing Fees

State filing fees for articles of incorporation now typically range from $50 to $300. The exact amount can depend on the state and the number of authorized shares. This update shows that while costs may vary, they remain relatively stable compared to previous years.

⏳ Processing Times

Processing times for business formation filings can be a crucial factor for entrepreneurs. Standard processing times now range from a few business days to several weeks, depending on the state. Expedited processing options are available in many states, with turnaround times from same-day service to 1-3 business days for an additional fee.

📋 Forming an LLC

If you’re interested in forming an LLC, the steps remain largely unchanged. You still need to select a compliant business name, appoint a registered agent, file articles of organization, draft an operating agreement, and apply for a federal Employer Identification Number (EIN). State filing fees for LLC formation range from $40 to $500, depending on the state.

📌 Key Points to Remember

  • 🆕 Only foreign-formed entities must report beneficial ownership.
  • 💰 State filing fees range from $50 to $300 for articles of incorporation.
  • ⏳ Standard processing times can take several weeks; expedited options are available.
  • 📋 Forming an LLC involves several key steps and associated costs.

💡 Tips for Starting an S Corporation

Review the details of your situation with an attorney to ensure all aspects are covered. Understanding the specific requirements for your business structure is essential for success.

📝 Understand State Requirements

Each state has unique requirements for forming an S corporation. Be sure to look up your state's specific guidelines to avoid delays or complications.

📅 Plan for Processing Times

When filing your formation documents, consider the processing times. If you need your business formed quickly, check if your state offers expedited options to speed up the process.

🏦 Keep Costs in Mind

State filing fees can vary widely. Make sure to budget for these costs, including any potential expedited processing fees, which can add to your total expenses.

📋 Prepare Required Documentation

Gather all necessary documents before starting the formation process. This includes a business name, articles of incorporation, and an operating agreement.

📞 Leverage Free Resources

Utilize free resources available through organizations like the Small Business Administration (SBA) or SCORE. These organizations provide valuable guidance on starting and managing your business without any cost.

🏆 Ranked by User Reviews (2026)

This section highlights various services related to business formation and compliance, ranked based on user reviews from Trustpilot as of October 2026. The ratings reflect user experiences and feedback, though they can change over time. Reviews can vary significantly, with unhappy customers often posting more frequently.

🥇 1. Rocket Lawyer

Rocket Lawyer has been rated 4.5. It is known for its legal document creation and business formation services. Users appreciate the ease of accessing legal advice through the platform.

However, some find the subscription model complex and not suitable for all users.

🥈 2. Inc Authority

Inc Authority holds a 4.8 rating. This service is recognized for offering no-cost Secretary of State registration and business credit services. Reviewers note its efficiency in business formation.

However, some users have reported upselling of additional services and occasional processing delays.

🥉 3. LegalZoom

LegalZoom averages 4.6. It provides a range of services, including business formation and registered agent services. Users often mention its comprehensive offerings.

Some issues reported include delays in processing and customer support responsiveness.

4️⃣ Bizee

Bizee has a rating of 4.8. It is known for LLC formation, registered agent, and compliance services. Users appreciate its user-friendly platform for business formation.

However, it has limited availability of legal advice and is not classified as a law firm or accounting firm.

🆓 Free Government and Nonprofit Options

Organizations like the Small Business Administration (SBA) and SCORE provide free assistance for forming and managing a business. They offer guidance on business structures, financing, and compliance, making them valuable resources for new entrepreneurs.

🔎 What to Compare When Choosing a Service

  • ⭐️ User ratings and reviews
  • 💰 Costs and fees associated with services
  • 📄 Range of services offered
  • ⏳ Processing times for filings
  • 📞 Availability of customer support

❓ Frequently Asked Questions

❓ What are the benefits of forming an S Corporation?

Forming an S corporation allows for pass-through taxation, meaning profits are taxed at the individual level rather than the corporate level. This can lead to tax savings for the owners.

🔍 How much does it cost to form an S Corporation?

Costs can vary significantly by state, with filing fees typically ranging from $50 to $300. Additionally, expedited processing may incur extra charges.

📄 What documents do I need to file for an S Corporation?

To file for an S Corporation, you generally need articles of incorporation, a business name, and an operating agreement. You should also apply for a federal Employer Identification Number (EIN).

⏳ How long does it take to form an S Corporation?

Formation times vary by state, ranging from a few business days to several weeks. Expedited options can reduce this time significantly.

🔗 Can I change my business structure later?

Yes, businesses can change their structure, but it may involve additional filings and compliance measures. It's important to understand the implications of such a change.

📞 Where can I find free resources for starting a business?

Free resources can be found through the Small Business Administration (SBA) and SCORE. These organizations offer valuable advice and support for new entrepreneurs.

⚖️ Recent Cases Related to Business Formation

Recent court rulings have addressed various aspects of business formation and compliance that impact S corporations and LLCs. These rulings highlight the importance of understanding legal requirements when starting a business.

For more information, check out 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.