Legal Counsel for Forming and Structuring Corporations
Corporations remain a common structure for businesses seeking defined ownership, formal governance, and flexibility in raising capital. Linnemeyer Law advises clients on the formation and structuring of Illinois corporations, including entity selection, tax classification, and governance documents, with an emphasis on long‑term planning and compliance.
Is a Corporation the Right Entity Structure?
Corporations are owned by shareholders and governed by a board of directors. Depending on the business’s goals, a corporation may be taxed as a C‑Corporation or may elect S‑Corporation tax status. Linnemeyer Law helps clients evaluate whether a corporate structure—and which tax classification—is appropriate based on ownership, growth plans, and tax considerations.
- Not sure if a corporation is the right fit? Explore our Entity Selection page to see other options.
Corporation Types
About C Corporations
C‑Corporations are the default corporate structure and are commonly used by businesses seeking outside investment or multiple classes of stock. They provide flexibility in ownership and capital structure but are subject to corporate‑level taxation.
About S Corporations
S‑Corporations allow eligible corporations to be taxed as pass‑through entities, avoiding double taxation while maintaining a corporate governance structure. S‑Corporation status is achieved through an IRS election and is subject to ownership and eligibility requirements.
Flat-Fee Corporation Formation Services
Linnemeyer Law offers flat‑fee corporation formation services designed to provide predictability and clarity at the outset of the engagement. Flat‑fee corporate formations start at $700, plus filing costs.
Flat-fee services commonly include:
- Entity structure and tax classification review
- Name availability search
- Preparation and filing of Articles of Incorporation
- Obtain Employer Identification Number (EIN)
- Preparation of bylaws and initial governance documents
- Preparation of initial shareholder and board resolutions
- Issuance of stock certificates
- S‑Corporation election filings, if applicable
Frequently Asked Questions
These are our most commonly asked questions about Corporations.
How long does it take to form an S Corporation?
Without expedited service, it takes approximately three weeks. With expedited service, an S corporation can be formed in 2-3 business days. Emergency 24-hour expedited service is available in certain circumstances. Additional costs and fees apply for expedited service.
What are the filing fees associated with forming an S Corporation?
The filing fee, paid to the Illinois Secretary of State to file the Articles of Incorporation, is $150. There is an additional fee of $100 for expedited filing service. Additionally, there is a $10 postage fee for the certified mailing to file the S-election with the IRS.
Should I form an S Corporation or a Limited Liability Company (LLC)?
This decision is made on a case-by-case basis. You must consider several factors, such as the purpose of the business, the number of owners, and the amount of gross income the company is expected to generate. A common alternative to an S corporation is an LLC that elects to be taxed as an S Corporation. An LLC that elects to be taxed as an S‑Corporation may provide certain tax benefits while retaining a simplified governance structure. It takes advantage of the tax benefits and the simplified governance structure.
What are the benefits of a corporation electing to be taxed as an S Corporation?
A corporation that chooses S-Corporation tax status has two main benefits. First, unlike a C-Corporation, an S-Corporation avoids double taxation. Second, self-employed shareholders do not have to pay self-employment or FICA taxes on distributions. In a C-Corporation or a single-member LLC, all business income for self-employed individuals goes through wages and is subject to these taxes. In an S-Corporation, only the salary paid to the shareholder-employee counts for employment taxes. The profit left over after paying the salary, called distributions, does not have employment taxes. The shareholder-employee must pay themselves a reasonable salary, which is subject to FICA taxes. Any distributions above that reasonable salary do not have FICA taxes.
Does an S Corporation need a Shareholder Agreement or Buy-Sell Agreement?
A Shareholder Agreement spells out the rights, responsibilities, and duties of a corporation’s shareholders. A Buy-Sell Agreement is a type of Shareholder Agreement that sets the rules for transferring and owning shares. It also explains what happens if a shareholder dies, becomes disabled, or leaves the company. Most single-shareholder S-Corporations do not need a Shareholder or Buy-Sell Agreement. We recommend that all corporations with multiple shareholders have one to control how shares transfer and to clearly define shareholders’ rights if someone dies, becomes disabled, or leaves the business.
Who can be a shareholder (owner) of an S Corporation?
The IRS limits who can be shareholders in an S-Corporation. Only individuals, certain trusts, estates, and some exempt organizations can own shares. Shareholders must be U.S. citizens or residents. Non-resident aliens, partnerships, corporations, LLCs, and most foreign entities cannot own shares. An S-Corporation cannot have more than 100 shareholders.
What are the governing documents of an S Corporation?
All Illinois corporations should start with shareholder and board of directors resolutions, bylaws, and stock certificates. If a corporation has more than one stockholder, it should also have a shareholder agreement or buy-sell agreement. Linnemeyer Law includes all recommended corporate governing documents in its flat-fee S-Corporation formation service. Corporations that take on venture capital, usually C-Corporations, need detailed Articles of Incorporation that define the rights for each class of stock. They also need a voting agreement, investors’ rights agreement, and a right of first refusal and co-sale agreement to protect everyone involved. The governing documents required will vary based on ownership, financing plans, and whether the corporation expects to take on outside investment.