Ohio S Corporation Formation

Forming an Ohio S Corporation is a two-step process. First, you will file formation documents at the state level. Once registered as an Ohio corporation, you will file your S Corp Election Form with the IRS. This will give you the "S" tax classification so that you can operate as an S corporation in Ohio.

Steps to Forming an Ohio S Corporation

The document required to form an Ohio corporation is called Articles of Incorporation. They should include the following information:

  • Name: You should provide the name of your corporation as you wish it to be legally recorded.
  • Shares: List the amount of shares your corporation is authorized to issue. Keep in mind that this number cannot be zero and that an Ohio S Corporation may not have more than 100 shareholders.
  • Location: Provide the city and county in which your S Corporation is located.
  • Directors (Optional): List the names and addresses of the initial Board of Directors.
  • Purpose (Optional): Provide your business purpose.

Along with the Articles of Incorporation, you must submit an Appointment of Statutory Agent form. The Statutory Agent must have a physical address (PO boxes are not allowed) within the state of Ohio.

Further Responsibilities of a Ohio S Corporation

After your Articles of Incorporation have been filed, you have 75 days to file an S Corp Election Form (form 2553) with the IRS. This form will give you S Corporation status and allow you to be taxed accordingly.

You need to submit an Article Amendment if any of the information provided in your Articles of Incorporation changes. The state must have current information on file for your corporation at all times.

More Information about an Ohio S Corporation

Your Ohio S Corporation:

  • Can have up to 100 owners/shareholders, but no more
  • May deduct the cost of benefits provided to employers (such as parking permits, health insurance, and so on)
  • Has a board of directors, which oversees the policies of the corporation
  • Cannot have more than one class of shares
  • Issues limited liability for owners
  • Must be owned by US citizens or resident aliens
  • Is taxed as owners’ income, not as a separate entity
  • Allows business losses to be deducted on the owners’ individual tax returns
  • Must pay payroll tax

For S corporations, only the salary paid to the owner-employee is subject to employment tax. The remaining income that is paid as a distribution is not subject to employment tax under IRS rules. Therefore, an owner of an S corporation stands to realize substantial employment tax savings. However, the salary you give yourself must not be artificially low; if the IRS finds your salary unreasonable, they may reclassify some of the distribution funds as salary and require you to pay taxes on it.

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Other Types of Businesses in Ohio

For information on other types of businesses in Ohio, please explore the links below.