Form a business entity, usually an LLC or corporation, under state law
Choose a business name and verify availability with the state
File the required formation documents with the state
Obtain an Employer Identification Number (EIN) from the IRS
Ensure the business meets S corporation eligibility requirements
Have no more than 100 shareholders
Have only allowable shareholders, such as individuals, certain trusts, and estates
Have only one class of stock
Be a domestic corporation
Hold an initial meeting and adopt bylaws or an operating agreement, if applicable
Issue stock to the owners
File IRS Form 2553, Election by a Small Business Corporation
Have all shareholders sign Form 2553
File Form 2553 on time, generally within 2 months and 15 days of the start of the tax year the election is to take effect
Obtain confirmation from the IRS that the S corporation election was accepted
Register for any required state and local tax accounts
Maintain corporate formalities and required records
File annual tax returns and required state filings