Use Signature Notifications For Legal Tennessee Startup For S-Corporation Forms For Free

Difference Between LLC and S Corp While LLCs are often treated as pass-through entities, meaning the income of the LLC flows through to its members, S Corps are accounting entities, meaning the S Corp itself calculates income and deductions at the corporate level before income is allocated to individual shareholders.

How to create an S Corporation in Tennessee Step 1: Choose Your Business's Name. ... Step 2: Appoint a Tennessee Registered Agent. ... Step 3: Elect Directors and Officers or Managers. ... Step 4: File Tennessee Corporate Charter/Articles of Organization. ... Step 5: File Form 2553.

Tennessee does not recognize the federal S corporation election and does not require a state-level S corporation election. You can still have an S corporation in Tennessee. The S corporation will only be an S corporation for federal tax purposes and not for state tax purposes.

In other words, like most other forms of business in Tennessee, S corporations are subject to both the excise tax and the franchise tax. At the same time, dividends, wages, or salary an individual shareholder receives from an S corporation are not subject to state income tax.

Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income.

An S corporation doesn't pay income taxes; the shareholders do have to share their loss or profit of their contribution to the corporation in their tax return like in a limited liability company. You have to file an IRS Form 2553 to start an S Corporation in Tennessee.