S Corps Made Simple: Your Step-by-Step Guide to Your First 90 Days

From tax savings to protecting personal assets, an S Corp offers plenty of advantages for solopreneurs. However, this business entity does come with a little extra setup and administrative work. 

Here’s the good news: setting up and running an S Corp for your solo business doesn’t need to be a hassle. Whether you’re just starting your business or are looking to make a switch, this guide breaks down the things you’ll need to know and take care of in your first 90 days as an S Corp.

Day 1-30: Starting and Setting Up

Getting started is the most daunting part for sole proprietors. But, while the process of creating a formal business entity might seem rigid and complex, there are ways to make it practically painless. Here’s how you’ll get started.

Establish Your Business Entity

You’ll need to start by establishing a formal business entity. If you plan to run your business as an S Corp, then you’ll want to start by establishing your business as a Limited Liability Company (LLC).

Why not establish yourself as an S Corp right away? Well, an S Corp isn’t actually a business entity on its own—it’s a tax status. So, you’ll set up your business as an LLC and then elect to be taxed as an S Corp.

The exact process for establishing your business entity will vary depending on your state’s specific requirements. But, generally, you’ll:

• Submit relevant paperwork: This will likely involve a registration application as well as articles of organization or incorporation, which include basic details about your business, like its name, address, effective date, and a registered agent (you) who should receive legal paperwork for your business.
• Pay filing fees: You’ll also need to pay a one-time filing fee to establish your business.

Apply for an Employer Identification Number

Sole proprietors or solopreneurs who run their businesses as LLCs don’t necessarily need an Employer Identification Number (EIN)—they can just use their personal social security number.

However, the IRS says that any business with employees needs to have an EIN. And, as an S Corp, you’ll technically be an employee of your own business. That means you’ll need to get an EIN before submitting your S Corp election.

The IRS has an online application where you can enter the basic details of your business and get an EIN. 

Elect S Corp Status

With your LLC and EIN, you’re ready to elect your S Corp status. You’ll do this by completing and submitting Form 2553 with the IRS.

Be aware that timing matters here. Brand new businesses need to submit an S Corp election within 75 days of their start date, while existing businesses need to make an election by March 15 of the following tax year for it to be effective for the current tax year.

Open a Business Bank Account

Separating your business and personal finances is helpful for recordkeeping, tax reporting, and keeping your business compliant. That means you’ll need to set up a separate bank account specifically for your business.

Obtain Relevant Permits and Licenses

It’s worth taking a look to see if there are any other licenses or permits you need to get for your business. Different cities, counties, and even industries have different requirements. A quick Google search for your specific type of business and location should turn up the information you need.

Let Lettuce Do the Work for You

Want to skip the setup work? Let Lettuce take care of everything (yep, even the paperwork) for you. When you sign up for Lettuce, the platform will automatically:

• Establish and register your LLC
• Apply for an EIN
• Complete your S Corp election
• Open your business bank account

If you’ve been missing out on the benefits of an S Corp just because you’re intimidated by the process, Lettuce can help you get those advantages—without any of the elbow grease.

Day 31-60: Systemizing and Simplifying

All of the initial setup is behind you, and you’re officially in business. Now what? Of course, you’ll spend most of your time focused on your billable client work. But, there are a few other tasks small business owners need to take care of to run an S Corp successfully.

Set Up a Recordkeeping and Payroll System

Businesses need a clear picture of their finances—like income, expenses, and outstanding payments. It’s not only important for tax reporting and compliance, but it also helps you make smarter decisions as you grow and refine your business.

Set up a system where you can handle all of your bookkeeping and business finances in one spot. That’ll make it easier to get the information you need whenever you need it—rather than combing through random notes, spreadsheets, and email threads.

As an S Corp, you’ll also need to run payroll for yourself and file payroll tax forms (like Form 941) with the IRS. Make sure your accounting system can manage this part of the process too.

Register for State Taxes

Depending on your state, you might need to register for various taxes, such as sales tax, use tax, or employment tax. Do a quick search for your state and type of business to make sure you’re in the loop on what you’ll need to pay.

Let Lettuce Keep Things Running Smoothly

Skip the spreadsheets with Lettuce’s automated tax and accounting system. Lettuce manages all of your taxes, monthly payroll, and accounting for you throughout the year so you can be confident and compliant—without any of the confusion and chaos.

Day 61-90: Scaling and Streamlining

You’re getting into a groove at this point. But, most business owners will readily admit that their businesses are constantly evolving—which means their tasks are too. Here are a few steps to ensure that you’re not just running your business but also refining it.

Track Your Income and Expenses

Committing to bookkeeping throughout the year will save you a lot of stress and headaches at tax time. When you receive an invoice payment from a client? Log it in your accounting system. When you make a purchase for your business? Document and categorize that expense.

Doing so means you always have an accurate and up-to-date picture of your business finances and helps you make smarter decisions about your budget and growth strategies.

Pay Your Quarterly Tax Payments

When you’re self-employed, income taxes aren’t automatically withheld from your paycheck like they are when you’re a traditional employee. You’ll pay quarterly estimated taxes four times per year to cover your tax obligations.

These payments are due every year on April 15, June 15, September 15, and January 15 of the following year. Put those tax deadlines in your calendar so you can pay on time (or even early).

Let Lettuce Crunch the Numbers

Rather spend more time on your billable work and less time on managing your finances? Lettuce automatically tracks and categorizes your expenses and payments and can even submit your quarterly estimated tax payments on your behalf. With Lettuce, you can automate your finances and focus your energy where it belongs: on your clients.

Start Your S Corp: All of the Savings, None of the Stress

S Corps can help freelancers and solopreneurs save big on their taxes. But, there’s admittedly a certain intimidation factor that keeps many self-employed people from making the switch. 

Fortunately, you can reap the benefits of an S Corp for your small business—without all of the hassles and headaches. Get started with Lettuce, and you’ll be up and running in no time.