top of page
  • Writer's pictureAshley Hymel

An S-Corp is Not a Legal Entity

I cannot tell you how many times someone has told me they want to create an S-Corp, or register their business as an S-Corp, or form an S-Corp.


But here's the thing. When you register your company as a legal entity with the State of Texas, S-Corp is not an option. Why? Because an S-Corp not a legal entity! It's a taxing classification with the IRS.


If you found this blog post because you also wanted to "form an S-Corp," (a) you're not alone, not by a long shot, and (b) you're not an idiot - there's a lot of confusing misinformation on the internet around this topic, and it's specialized knowledge known primarily to business lawyers and accountants.


And luckily for you, now I am here to set the record straight.


A corporation can be taxed as an S-Corp (if it satisfies certain criteria).


An LLC can be taxed as an S-Corp (if it satisfies certain criteria).


But you cannot register your company with the State of Texas as an S-Corp. (I haven't looked into other states - I practice in Texas and know this to be true in Texas - but I suspect it's true across the country)


If you want to take advantage of the deductions available to a business taxed as an S-Corp, you'll need to:


1/ register your business as an LLC or corporation (LLC is typically the easiest to register and maintain), and


2/ talk to your accountant about filing an S-Corp election with the IRS.


And if/when you are ready to take the first step to being taxed as an S-Corp, we would love to help you register your LLC. Just click here to get started.


Author: Ashley Hymel, attorney and cofounder of The Corporate Legal Ltd. Co, published 05.17.2023

2 views0 comments

Recent Posts

See All

Starting a Business: What You Need to Get Started

If you google the title of this post, you'll find hundreds of thousands of articles, each with their own take on what you need to start a business. Some of these might be written by attorneys, but mos

Comments


bottom of page