Ted and Ellen both needed to form new business structures. The basic
steps they used follow.
Ted and Ellen’s Action Items
Incorporate Ted’s Business
1. File appropriate paperwork with state agency.
2. After receipt of approval, apply for employer identification number
(EIN) from the IRS (Form SS-4).
3. Apply for local licensing—business permit, sales tax permit,
whatever else is required.
4. Apply for S corporation status from the IRS (Form 2553).
(Note: Ted and Ellen live in a community property state, so, although
Ted solely owned this company, Ellen also needed to
sign off on the S corporation form.)
5. Hold first stockholders meeting to elect board of directors.
6. Hold first board of directors meeting.
7. Prepare organizational minutes.
8. Issue stock certificates.
9. Open checking account with stockholder loan.
10. Apply for credit card.
11. Set up accounting information.
12. Start filing system.
13. Purchase assets at fair market value from old sole proprietorship.
14. Notify customers of business structure change.


Incorporate Ellen’s Business
1. File appropriate paperwork with state agency.
2. After receipt of approval, apply for employer identification number
(EIN) from the IRS (Form SS-4).
3. Apply for local licensing—business permit, sales tax permit,
whatever else is required.
4. Apply for S corporation status from the IRS (Form 2553).
(Note: Ted and Ellen live in a community property state, so, although
Ellen will solely own this company, Ted will also need to
sign off on the S corporation form.)
5. Hold first stockholders meeting to elect board of directors.
6. Hold first board of directors meeting.
7. Prepare organizational minutes.
8. Issue stock certificates.
9. Open checking account with stockholder loan.
10. Set up accounting information.
11. Start filing system.