Register a New Hampshire S Corp

Starting an S corporation in New Hampshire is an appealing option for business owners looking to make the most of their tax situation. An S corp isn’t a type of business entity but a tax choice that can bring about real tax savings. This is especially true in New Hampshire, where smart tax strategies are always welcome.

For owners of a limited liability company (LLC), this tax status change is worth considering. Normally, all the income from an LLC could be subject to self-employment taxes. However, if your LLC is taxed as an S corp, you can pay yourself a salary for the work you do in the business. The neat part? You’ll only pay self-employment taxes on this salary. Any extra money the business makes and passes to you as dividends won’t have these taxes applied.

This guide will help you understand how to set up an S corp in New Hampshire, outlining the benefits and walking you through the steps to potentially save on taxes while keeping your business compliant.

S Corporation Requirements and Limitations

To meet the filing requirement for the S Corp election, you’ll complete Form 2553 and file it with the IRS. Before you can be eligible for the S election, your business must meet the following S Corp requirements:

• Be a domestic business (but not an ineligible company such as an insurance company, international sales corporation, or certain kinds of financial institutions)
• Have no more than 100 shareholders
• Have only allowable shareholders (individuals, certain trusts, and estates but not partnerships, corporations, or non-resident alien shareholders)
• Have only one class of stock

Your business must maintain these requirements to continue its S Corp status. To make the initial S Corp election, you’ll want to file Form 2553 within two months and 15 days after the beginning of the tax year or any time during the preceding tax year.

What to know before creating an S Corporation in New Hampshire 

First, you should know that the IRS has default taxation methods for each type of business. Second, New Hampshire doesn’t recognize federal S Corp elections, so you should consider the overall benefit of the S Corp election to your tax liability.

What’s the difference between an S Corporation and a C Corporation?

The IRS’s default tax treatment for business corporations is the “C Corp.” C Corps are subject to double taxation, meaning that the corporation pays income taxes at the corporate level and withholds employment taxes from its employees’ wages. When you elect S Corp status, the profits and losses from the business are “passed through” to the business owners. The S Corp won’t pay corporate income tax. Instead, the owners will pay taxes on the business’s profits and losses on their personal income tax returns.

At the state level, New Hampshire taxes S Corps according to their underlying business structure regardless of their federal election. Therefore, S Corporation filing requirements are simple. If you formed your business as a corporation, New Hampshire will tax your business as a corporation. If you formed another entity type, the state will tax the S Corp as that entity type.

New Hampshire doesn’t have a general income tax, but it does charge taxes on dividend income. It also requires some businesses to pay a Business Profits Tax (BPT) and Business Enterprise Tax (BET). The entity type’s only difference is when calculating gross business profits (for BPT) or accumulated revenues and profits (BET). All businesses that exceed the tax thresholds will pay the tax regardless of the entity type.

What are the requirements to create an S Corporation? 

To create an S Corporation, you have to form a business that falls within the limitations identified above, and you have to file Form 2553 with the Internal Revenue Service (IRS) within one of the timeframes listed above. 

If you’re ready to learn about filing as an S corporation in New Hampshire, we’ll walk you through it. First, we’ll show you how to form an LLC in New Hampshire and how to form a corporation in New Hampshire. Then we’ll explain how to file for S corp status as either an LLC or corporation.

S-Corp Election Steps for LLCs

For detailed formation steps, see our New Hampshire LLC formation guide.

• Step 1 – Choose a name 
• Step 2 – Choose a statutory agent
• Step 3 – Choose directors or managers
• Step 4 – File Articles of Incorporation or Certificate of Formation with the New Hampshire Secretary of State
• Step 5 – Apply for S Corp status with IRS Form 2553

S-Corp Election Steps for Corporations

For detailed formation steps, see our New Hampshire Corporation formation guide.

• Step 1 – Name Your New Hampshire Corporation
• Step 2 – Appoint Directors
• Step 3 – Choose a New Hampshire Registered Agent
• Step 4 – File the New Hampshire Articles of Incorporation
• Step 5 – Create Corporate Bylaws
• Step 6 – Draft a Shareholder Agreement
• Step 7 – Issue Shares of Stock
• Step 8 – Apply for Necessary Business Permits or Licenses
• Step 9 – File for an EIN and Review Tax Requirements
• Step 10 – Submit Your Corporation’s First Report
• Step 11 – Apply for S Corp status with IRS Form 2553

File Form 2553 to turn your business into an S Corporation

Once you’ve formed your business, the final step is to make the S Corp election. Corporations will file Form 2553, Election by a Small Business Corporation. LLCs must first elect to be taxed as a corporation, then they need to file Form 2553 to attain S Corp status.

Pros and cons of creating an S Corporation

While the S Corporation provides many benefits, it may not be the right fit for everyone. You should consider the pros and cons of the S Corp before deciding on the election.

Pros

When you create an S Corporation, you’ll get asset protection with pass-through taxation and tax-favorable characterization of income. The S Corp also allows for the cash method of accounting.

Cons

An S Corp requires additional formation and maintenance expenses. Your business will be subject to tighter tax qualification obligations, stock ownership restrictions, and closer IRS scrutiny. You’ll also have less flexibility in allocating income and loss. Finally, because New Hampshire doesn’t recognize S Corp status, there’s no benefit for state taxes (such as state income tax).

S Corp Tax Calculator

The S Corporation tax calculator below lets you choose how much to withdraw from your business each year, and how much of it you will take as salary (with the rest being taken as a distribution.) It will then show you how much money you can save in taxes.

Disclaimer: The savings estimate provided by this tool is for informational purposes only and should not be considered financial, tax, or legal advice. Actual savings may vary depending on individual circumstances and other factors. We recommend consulting with a qualified tax or legal professional before making any decisions regarding your business entity. ZenBusiness, Inc. is not responsible for any actions taken based on the information provided by this tool. Use of this tool does not establish any client relationship with ZenBusiness, Inc.

Related article: File a New Jersey S Corp

Get help establishing a New Hampshire LLC with S corp tax election

When you’ve decided that the New Hampshire S Corporation is right for your new business, let us help. Our team of business experts can ensure you complete all the steps needed to form an S Corp. Then, we’ll guide you through legal compliance for the life of your business. Choose our products and services, and we’ll be here to answer all your questions.