How to Start an S-Corp in West Virginia

West Virginia, popularly known as The Mountain State, offers a bunch of benefits for business owners, especially the state capital Charleston has a lot to offer to the rising entrepreneurs in the state. If you want to start a business in West Virginia, you must choose an appropriate corporate structure. You can have a corporation or a sole proprietorship or set up an LLC in West Virginia. There are a few guidelines that you should be aware of when it comes to starting an S-Corporation. In West Virginia, S-Corporation is businesses’ most common corporate structure, especially start-ups. It was developed in order to give companies limited liability protection while preserving the advantages of being a distinct legal organization.

In this article, you will learn about how to start an s-corporation in West Virginia. You will also learn whether an s-corporate business structure suits your business. Please read all the points carefully before starting your business in West Virginia.

What is an S-Corp in West Virginia?

An S corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for both corporations and LLCs but in different ways. S-corp is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

If you want an S corp status for your business, you can always form an LLC to protect your personal assets from business debts. It takes some basic steps to have a successful s-corporation in West Virginia. S-Corps do pay corporate income taxes, but they are still treated as disregarded companies for federal tax purposes.

S-corps pay corporate taxes that LLCs do not have to pay. If you want to have an S-corp status, then we would recommend you have an LLC instead. This will protect your personal assets from your business liabilities and you don’t have to pay any corporate taxes.
–LLCBuddy Editorial Team

Limitation and Requirements of S-Corp in West Virginia

As you have decided to have an S-Corp structure for your business, you must know the limitations and requirements to qualify for S-Corp status. We have listed some important points to consider following for your reference-

Be a domestic corporation.
Not be an ineligible corporation, such as specific financial institutions, insurance providers, or domestic corporations engaged in overseas sales.
Have just one type of stock.
Have a maximum of 100 shareholders or members.
Have only permitted individuals, certain trusts, and estates as stockholders or members.

If you are qualified for the limitations and requirements, you can apply for an S-Corp in West Virginia.

How to Start an S-Corporation in West Virginia?

To create S-Corp in West Virginia, you must follow the below guidelines that include forming a business name, hiring a Registered Agent, filing your Articles of Organization, creating an operating agreement in West Virginia, requesting an EIN, filing a form 2553.

Step 1: Register a Business Name in West Virginia

After you have decided on the idea to start an S-Corp in West Virginia, deciding the name for your corporation is significant. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity.

If you want to set up an LLC, there is a complete guide on West Virginia LLC name guidelines for a proper LLC name. Here are some guidelines you must follow while naming your S-corp.

Avoid profanities
The name should be available, and no other entity should have the same name in West Virginia.
Limit of restricted words that need a license in West Virginia, for example, doctors, attorneys, etc.
Do not use a business name that sounds like a government agency or entity (like “police,” “county,” and “state”)

Step 2: Hiring the West Virginia Registered Agent

The next step in starting an S-corp in West Virginia is hiring a West Virginia Registered Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents (such as subpoenas), all notices of lawsuits, and other official government correspondence in West Virginia. Forming an LLC and an S-corp will be easier if you have Registered Agent in West Virginia.

Step 3: File Your West Virginia Articles of Organization

The Articles of Organization is an important document to start your limited liability company (LLC). West Virginia Articles of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization. In order for the “Articles of Organization” to be filed, you need to pay a filing fee to the state. In West Virginia, the filing fee is $100 (Online & by mail).

In California, along with the Articles of Organization, you must send the Statement of Information to file your company. The statement of information is a mandatory document in California, but other states do not have this document.

Step 4: Creating an Operating Agreement in West Virginia

After you have filed your Articles of Organization in West Virginia, the next step is to create an LLC operating agreement in West Virginia. The West Virginia LLC operating agreement is essential and necessary since it will cover your corporation’s important documentation and rules. The operating agreements usually include the following-

Article I: Organization
Article II: Management and Voting
Article III: Capital Contributions
Article IV: Distributions
Article V: Membership Changes
Article VI: Dissolution

After creating the LLC operating agreement, you can benefit in several ways since it will discuss how decisions for the business will be made, including management and member voting structure. For more details about how an operating agreement works, please check Operating Agreement.

Step 5: Request for EIN in West Virginia

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your general partnership. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in West Virginia can be through the following:

Apply Online- You can apply for EIN online, the most desirable and fastest method for users.
Apply by Fax- Another method of obtaining EIN is to fax Form SS-4 (PDF) after entering all the correct information to (855) 641-6935.
Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

If you would like to be assisted in getting an EIN in the Internal Revenue Service, we can get your EIN for you. Our EIN service is quick and hassle-free. For more details about EIN for your business, check why you need EIN.

Step 6: File Form 2553 for Your S-Corp Business in West Virginia

Once you have obtained your EIN and Articles of Organization to form an S-Corp, you must file Form 2553, Election by a Small Business Corporation, to apply for S-corp status. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In West Virginia, you can send your form 2553 to the Department of the Treasury Internal Revenue Service Center – Kansas City, MO 64999 Fax: 855-887-7734.

Advantages of Starting an S-Corporation in West Virginia

Filing an S-Corp in West Virginia has numerous benefits and advantages.

Writing Off Losses: With S-corp, owners can deduct business losses from their individual income statements. If the company loses money in the first few years, it may balance its other sources of revenue. Even so, understand the shareholder loss limitations set by the IRS.

Pass-Through Taxation: Starting an S-Corp is the widely known advantage in forming this kind of business structure since an s-corp uses a pass-through taxation structure. The company does not pay twice the tax in this kind of taxation. Because of this structure, most start-ups and entrepreneurs in West Virginia apply for an S-Corp LLC.

Qualified Business Income Deduction: A qualified business income, or QBI, is the total of all qualified items of income, gain, deduction, and loss from any qualified trade or business, including S-Corp. With this, S corp owners may deduct up to 20% of their eligible earnings under the Tax Cuts and Jobs Act.

FAQs

What are the steps to start an S-Corp in West Virginia?

To start an S-Corp in West Virginia, you will need to file a Certificate of Incorporation with the West Virginia Secretary of State, appoint a registered agent, hold a shareholders meeting, appoint directors, issue stock to shareholders, draft and adopt corporate bylaws, and obtain any necessary licenses and permits.

What is the cost to start an S-Corp in West Virginia?

The cost to start an S-Corp in West Virginia includes the state filing fee for the Certificate of Incorporation ($100) plus any additional fees for professional services such as legal or accounting advice.

What is a registered agent in West Virginia?

A registered agent in West Virginia is a person or entity with a physical address in the state who is designated to accept service of process on behalf of the corporation.

How many directors must a West Virginia S-Corp have?

A West Virginia S-Corp must have at least one director, but there is no maximum number of directors.

What is the filing fee to form an S-Corp in West Virginia?

The filing fee to form an S-Corp in West Virginia is $100.

Does a West Virginia S-Corp need to file an annual report?

Yes, a West Virginia S-Corp must file an annual report with the West Virginia Secretary of State each year.

What is the penalty for not filing the annual report for an S-Corp in West Virginia?

If an S-Corp in West Virginia fails to file its annual report, the corporation may be subject to a penalty of up to $50 per month.

Are there any other fees or taxes due when forming an S-Corp in West Virginia?

Depending on your business activities, you may be required to pay additional fees or taxes, such as sales tax, income tax, or payroll tax.

What is the state income tax rate for an S-Corp in West Virginia?

The state income tax rate for an S-Corp in West Virginia is 6.5%.

Can a West Virginia S-Corp be formed online?

Yes, it is possible to form a West Virginia S-Corp online using an online filing service.

What legal documents should a West Virginia S-Corp have?

A West Virginia S-Corp should have a Certificate of Incorporation, bylaws, and shareholder agreements.

Does a West Virginia S-Corp need to issue stock?

Yes, a West Virginia S-Corp must issue stock to its shareholders.

Does a West Virginia S-Corp need to have an operating agreement?

No, an operating agreement is not required for a West Virginia S-Corp, but it is highly recommended to ensure that all shareholders are aware of their rights and responsibilities.

How long does it take to form an S-Corp in West Virginia?

The process of forming an S-Corp in West Virginia typically takes 4-6 weeks, depending on the services you choose and the speed of the West Virginia Secretary of State.

Does a West Virginia S-Corp need to hold annual meetings?

Yes, a West Virginia S-Corp must hold an annual shareholders meeting.

What is the minimum number of shareholders required for an S-Corp in West Virginia?

An S-Corp in West Virginia must have at least one shareholder.

Does a West Virginia S-Corp need to obtain any special licenses or permits?

Depending on the nature of your business, you may need to obtain special licenses or permits from the state or local authorities.

Is it necessary to obtain an Employer Identification Number (EIN) when forming an S-Corp in West Virginia?

Yes, an EIN is required in order to form an S-Corp in West Virginia.

Is it necessary to publish a Notice of Incorporation in West Virginia?

No, it is not necessary to publish a Notice of Incorporation in West Virginia.

What is the process to amend the articles of incorporation in West Virginia?

To amend the articles of incorporation in West Virginia, you must file an amended Certificate of Incorporation with the West Virginia Secretary of State, and the amendment must be approved by the shareholders.

How can a West Virginia S-Corp be dissolved?

To dissolve a West Virginia S-Corp, you must file a Certificate of Dissolution with the West Virginia Secretary of State and notify the shareholders.

What is the difference between an S-Corp and a C-Corp in West Virginia?

An S-Corp is a pass-through entity where the income is not subject to corporate taxes, while a C-Corp is a separate entity that is subject to corporate taxes.

Does a West Virginia S-Corp need to have a board of directors?

Yes, a West Virginia S-Corp must have a board of directors.

Does a West Virginia S-Corp need to have an accounting system?

Yes, a West Virginia S-Corp must maintain accurate books and records of its financial transactions.

Is there a requirement to prepare financial statements for a West Virginia S-Corp?

Yes, a West Virginia S-Corp must prepare financial statements in accordance with Generally Accepted Accounting Principles (GAAP).

What is the minimum amount of capital required to form an S-Corp in West Virginia?

There is no minimum amount of capital required to form an S-Corp in West Virginia.

What are the roles and responsibilities of a West Virginia S-Corp’s directors?

The roles and responsibilities of a West Virginia S-Corp’s directors include setting corporate policies and overseeing the corporation’s operations.

What are the advantages of forming an S-Corp in West Virginia?

The advantages of forming an S-Corp in West Virginia include limited liability protection for its owners, pass-through taxation, and the ability to attract investors.

What are the requirements for forming an S-Corp in West Virginia?

To form an S-Corp in West Virginia, you must file a Certificate of Incorporation with the Secretary of State’s office in West Virginia. You must also provide a registered agent within the state, appoint a board of directors, and hold an initial meeting of the board of directors.

What taxes will I be responsible for if I form an S-Corp in West Virginia?

Corporations in West Virginia are subject to the Corporate Net Income Tax, Business and Occupation Tax, and Personal Income Tax. Additionally, you will be responsible for filing quarterly estimated taxes to the West Virginia State Tax Department.

Is there an online filing option for forming an S-Corp in West Virginia?

Yes, you can file online through the West Virginia Secretary of State’s website.

How much will it cost to form an S-Corp in West Virginia?

The filing fee for a Certificate of Incorporation in West Virginia is $100.

Is there ongoing paperwork required for maintaining an S-Corp in West Virginia?

Yes, you must file an annual report with the West Virginia Secretary of State’s office each year. Additionally, you should keep records of all board and shareholder meetings as well as any changes to the company’s structure or ownership.

Why West Virginia S Corporation is So Important

First and foremost, an S Corporation provides limited liability protection to its owners, just like a C Corporation. This means that the personal assets of the owners are protected from any business debts or legal liabilities, offering peace of mind and security. Limited liability can be a powerful benefit, especially for small business owners who may have invested significant personal assets into their businesses.

Another key advantage of an S Corporation is its pass-through taxation feature. Unlike C Corporations, where profits are subject to double taxation – at both the corporate level and individual level for shareholders – an S Corporation allows profits to be passed through to its shareholders as individual income. This can result in significant tax savings, as it avoids the corporate tax brackets that can eat into profits.

Furthermore, forming an S Corporation in West Virginia can also offer credibility and professionalism to a small business. The “Inc.” or “Corp.” designation can give potential customers and partners the impression of stability and longevity, which can be crucial for building trust and establishing relationships in the business world.

Additionally, an S Corporation allows for flexible ownership structure, with the ability to have more than one class of stock, which can be appealing for businesses that want to attract investors or provide equity incentives to key employees. This flexibility can help small businesses grow and thrive, by offering creative solutions to financing and incentivizing employees.

One important requirement of being an S Corporation is adhering to certain eligibility criteria, such as having fewer than 100 shareholders and only one class of stock. While this could be seen as a limitation for some businesses, it can also act as a filter to ensure that only serious and committed stakeholders are involved in the business.

In summary, forming an S Corporation in West Virginia can offer a multitude of benefits for small businesses, ranging from limited liability protection and pass-through taxation to credibility and flexibility in ownership structure. While it may not be the most well-known or glamorous business entity type, the advantages of an S Corporation can be crucial for the success and growth of a small business. It is essential for entrepreneurs to consider all their options and weigh the pros and cons of each formation type before making a decision, as the right choice can have a significant impact on the future of their business.

Conclusion

In conclusion, starting an S-corp in West Virginia is a strategic choice for entrepreneurs seeking the benefits of limited liability and favorable tax treatment. One can successfully establish an S-corp by following the outlined steps, including selecting a unique name, filing the Articles of Incorporation, obtaining necessary licenses, and adhering to state-specific regulations. Ultimately, this corporate structure offers a strong foundation for business growth and protection, making it a worthwhile consideration for those looking to launch a venture in West Virginia.