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Swyft Filings is committed to providing accurate, reliable information to help you make informed decisions for your business. That's why our content is written and edited by professional editors, writers, and subject matter experts. Learn more about how Swyft Filings works, our editorial team and standards, what our customers think of us, and more on our trust page.
As a small business owner, you might wonder if forming an S corporation in New Hampshire is worth it. After all, the business entity you choose affects how the Internal Revenue Service (IRS) taxes your company.
This article explores what it takes to form an S corp in New Hampshire and what it could mean for your company.
S Corporation in New Hampshire: Key Points
An S corporation is a tax classification offered by the IRS for eligible LLCs and corporations.
Existing LLCs and corporations can elect S corp status by filing Form 2553 with the IRS.
You must be a domestic corporation with no more than 100 shareholders and one class of stock to be eligible for S corp status.
Unlock tax savings and ensure compliance with critical regulations with our assistance.
What Is an S Corporation?
The IRS defines an S corporation as a pass-through tax entity, which means that all of the company’s income, losses, credits, and deductions pass through to the shareholders for federal tax purposes.[1]
As such, S corp status differs from C corporation (C corp) status based on the tax treatment your business receives. Where a C corp must pay federal corporation taxes, an S corp doesn’t. Instead, each shareholder pays taxes on income via their personal tax returns.
As a result, the S corp status is similar to the limited liability corporation business entity. Both are pass-through entities, which can benefit business owners when tax time arrives.
However, an S corp and an LLC aren’t the same things. Where an LLC is a business structure, an S corp is a tax classification. As such, an LLC can become an S corp, though an S corp can’t become an LLC.
Tax Considerations for an S Corporation in New Hampshire
With S corp status being a tax classification, it’s worth digging deeper into the benefits this status can offer your business regarding tax treatment. Interestingly, New Hampshire treats S corp status differently than many other states.
New Hampshire Tax Treatment of S Corporations
New Hampshire follows IRS guidelines in terms of the treatment of S corporations on the federal level. An S corp doesn’t pay federal corporate taxes, with all income passing through to the shareholders, who pay income tax on their earnings.
However, things get more complicated on the state level.
According to the New Hampshire Department of Revenue Administration website, S corps are treated the same as C corps when it comes to state-administered corporate taxes.[2] Consequently, an S corp must incorporate all pass-through items into its corporate profits when declaring corporate income to the state.
That rule means a New Hampshire S corp must pay the state’s Business Profits Tax (BPT). At the time of writing, the BPT is 7.6% on any income earned from conducting business in New Hampshire for taxable periods either on or after December 31, 2022.
New Hampshire Franchise Tax for S Corporations
New Hampshire’s decision to charge corporate taxes on the state level eliminates one of the main benefits of having an S corp. However, there’s a slight reprieve in that the state doesn’t charge a franchise tax and has limited personal income taxes.
Franchise taxes vary from state to state, with some charging one-off fees while others charge a regular franchise tax based on business income. New Hampshire only implements BPT, meaning any franchise tax is rolled into your corporate taxes.
Pass-Through Taxation
In a typical S corp setup, all business profits pass through to the company’s shareholders. Those shareholders then declare their income on their tax returns and pay tax based on their personal income tax rates.
As such, many business owners use the S corp status to avoid the issue of double taxation, wherein they pay taxes at the corporate level and then again at the personal level. However, New Hampshire’s decision to levy BPT on S corps eliminates much of this benefit, resulting in double taxation for S corps in the state.
Requirements for Forming an S Corporation in New Hampshire
Whether you have a limited liability company or a C corp, you might be able to file for S corp status. However, the IRS has stringent criteria for achieving this status, which you must follow to form an S corporation in New Hampshire.[3]
First, let’s look at what your business must do to achieve the status:
Be a domestic corporation that’s registered somewhere in the United States
Offer a single class of stock to your shareholders
Have no more than 100 S corporation shareholders, who can only be individuals, estates, or certain types of trusts
There are also some things that you must avoid doing to meet the IRS’s criteria, including the following:
Don’t have any ineligible S corporation shareholders, which includes other corporations, partnerships, and non-resident aliens.
Not be an ineligible business, such as insurance companies, some financial institutions, and Domestic International Sales Corporations (DISCs)
The state of New Hampshire doesn’t enforce any further criteria beyond the IRS’s requirements. If you’re worried about meeting these requirements or making mistakes when you file, you can trust Swyft Filings to handle everything on your behalf with our S corp filing service.
Filing as an S Corp in New Hampshire
If you’re interested in creating an S corporation in New Hampshire, you need to form your business before you can apply for S corp status. Our six-step process takes you from choosing your business name to setting up your New Hampshire S corp.
Step 1: Choose a Business Name
Choosing a business name seems like a simple task. However, you must ensure your chosen name isn’t the same as the name of any other business operating in New Hampshire. You can check your name with our free business name search tool.
Assuming your chosen name isn’t currently in use, your next step is to reserve the name. Though name reservation isn’t a legal requirement when forming an S corporation in New Hampshire, it protects your name for up to 120 days.[4] This gives you ample time to file your formation documents without worrying about somebody taking the name.
New Hampshire also allows companies to operate under “trade names.” These are the same as “doing business as” or DBA names, meaning they are alternative names that represent your business. You must complete Form TN-1 Trade Name Registration for every trade name you wish to use.[5]
Finally, it’s a good idea to trademark your chosen business name and trade names with the state. You can do this easily using the state’s “Trademark That!” service for $50 per trademark.[6]
Step 2: Appoint Directors and a Registered Agent
With your business name chosen and protected, you must elect S corp directors and choose a registered agent before you file your formation documents.
Any New Hampshire corporation needs at least one director, with many opting to create a board of directors. In an S corp, these directors will usually be S corporation shareholders.
The directors are responsible for overseeing the company’s overall direction and making key decisions relating to the S corporation’s bylaws.
A registered agent is an individual or organization that handles several responsibilities. In New Hampshire, you can select a third party to be your registered agent or serve as your own agent.
While the latter is a tempting idea, especially given that you save money when serving as your own registered agent, it’s worth understanding what a New Hampshire registered agent must do when working for your business. Their responsibilities include the following:
Maintaining a physical street address registered with the Secretary of State (P.O. boxes and mailing services don’t count)
Being available during regular business hours
Receiving service of process, legal documents, and communications from the Secretary of State
Maintaining a physical address and regular business hours can be problematic for many businesses, especially those that operate at night or companies that are entirely online. Registering your address with the Secretary of State also creates privacy concerns, as anybody in the state can send mail to your address.
Add to that the work involved in serving as a registered agent, and it’s often better to hire a third-party service. Swyft Filings offers that service, guaranteeing you a physical registered office in New Hampshire and 24/7 access to a dashboard containing the documents your business receives.
Step 3: File Articles of Organization
Since S corp status is a tax classification rather than a business entity, you need to create your company before filing to become an S corp. In New Hampshire, this involves the submission of a Certificate of Formation or Articles of Incorporation.
You’ll file a Certificate of Formation if you’re creating an LLC. Filing fees are $100. You must provide information about the business and its registered agent.[7]
When creating a corporation, you’ll use the Articles of Incorporation form to provide similar information to a Certificate of Formation. However, the state of New Hampshire also asks for information about the shares the business will issue. Again, filing fees for this form are $100.[8]
You can submit either form via the New Hampshire QuickStart website, though you must create an account first. Otherwise, you can send your formation documents to the following address:
Corporation Division, NH Dept. of State
107 N. Main St., Rm 204
Concord, NH 03301
All New Hampshire LLCs and corporations must also file annual reports with the state. These yearly documents demonstrate that your business is still operational and are required to keep your company in good standing with New Hampshire.[9] Falling out of good standing can lead to your business getting dissolved.
Step 4: Create an S Corp Operating Agreement
If you’re forming an LLC in New Hampshire, it’s smart to create an operating agreement by which you’ll govern the LLC. The state doesn’t require you to have such an agreement, though there are several benefits to spending a little time on creating one.
An operating agreement is a legal document that you can use to define the bylaws of your S corp. Business owners can also use their operating agreements to define the roles and responsibilities of each member of their LLC, or each shareholder in an S corp’s case, and what ownership percentage each has of the business.
Your operating agreement ensures the state of New Hampshire doesn’t have to rely on its rules for governing organizations when dealing with your business. The document also lowers the possibility of internal disputes as it gives you a set of bylaws to which you can refer as and when needed.
Step 5: Apply for an Employer Identification Number
Whenever you pay your personal income tax, you state your Social Security number as part of submitting your tax returns. This unique number helps the IRS identify you for tax purposes.
An Employer Identification Number (EIN) serves the same purpose for any business that needs to pay employment taxes. The IRS issues this nine-digit identifier, though they’re only legally required if your S corp employs other people.
Still, getting an EIN is a good idea whether you have employees or not for the following reasons:
Prepare yourself for future growth if you have an EIN before you employ anybody
Open a business bank account at many major banks and financial institutions
Lend credibility to your business, even if you don’t have any employees
You can apply for an EIN when you’re ready by visiting the IRS website, or we’ll handle the paperwork to obtain an EIN on your behalf.
Step 6: File Form 2553 for S Corporation Election
With your business officially created and certified to transact in New Hampshire, you can apply for S corp status. The good news is that the S corporation election process is straightforward if you meet the criteria discussed earlier in the article.
You must file Form 2553, Election by a Small Business Corporation, to apply for S corp status with the IRS. You have until two months and 15 days into the current tax year to file this form if you want to become an S corp for the current tax year. Any later than two months and 15 days, and you have to wait until the next year to get S corp status.[10]
If you have an LLC business entity that you wish to turn into an S corp and miss the deadline, you can submit Form 8832, Entity Classification Election, alongside Form 2553. Form 8832 allows you to elect to have your LLC taxed as a corporation, with Form 2553 immediately turning that corporation into an S corp.[11]
New Hampshire S Corp vs. New Hampshire LLC
Though New Hampshire charges state-level corporation taxes to S corps, there are still tax benefits on the federal level. As such, the choice between C corp status and an S corporation election is simple, at least on a tax treatment level, if your business qualifies to be an S corp.
It’s not so easy to make that decision if you have a New Hampshire LLC, as you may not see how forming an S corp is advantageous. Here are the pros and cons of each structure.
Advantages of Starting an LLC in New Hampshire
Offers members some liability protection, though this protection isn’t absolute
Has easy management, both in terms of the paperwork required and the control you have over how the business works
Disadvantages of Starting an LLC in New Hampshire
Subject to rules that force the LLC to dissolve if one of its members leaves
Have to pay more self-employment tax with an LLC than you would with an S corp
Advantages of Forming an S Corporation in New Hampshire
Offers more liability protection than LLCs because they’re corporate structures
Attracts investment easier because investors see the corporate structure as more permanent than the LLC structure
Disadvantages of Forming an S Corporation in New Hampshire
Must meet several stringent requirements to qualify as an S corp
Must pay a New Hampshire business tax, though this tax also applies to LLCs
Ready to File for S Corp Status in New Hampshire?
If you have a small business in New Hampshire, you have many choices to make regarding your tax structure. For those who feel that S corp status is right for them, you need somebody by your side to handle the filing and ensure that no S corp limitations hold you back.
Swyft Filings is here for you.
We work with business owners who want to create an S corporation in New Hampshire in several ways. If you’ve yet to form your LLC or corporation, we can help you to get your business up and running. Once you have a business, we’re here to help you file for S corp status quickly and easily.
Maximize Tax Benefits: Experience pass-through taxation with New Hampshire S corp status and avoid double taxation.
Access a One-Stop Solution: Establish an LLC or C corporation easily and then transition to S corp status, all within our platform.
Stay Compliant: Our compliance alerts help keep you up-to-date on all the complex compliance requirements of an S corp so you can stay on the government’s good side.
Frequently Asked Questions
What is an S corporation in New Hampshire?
An S corporation is a pass-through tax entity combining the best LLC and C corp structures.
Does New Hampshire recognize S corporations?
New Hampshire recognizes S corps, though it requires them to pay Business Profits Tax. This is likely because the state’s personal income tax is only levied on interest and income from dividends.
What is the turnaround time for filing for S corp status with the IRS?
The IRS can take up to 60 days to approve S corp status once you’ve filed for it.
What is the difference between an S corp and an LLC?
The main difference is that LLC is a business entity, whereas S corp is a tax classification.
What are the requirements for an S corporation in New Hampshire?
New Hampshire requires your business to meet the IRS’s criteria for S corp status, including the following:
Be a domestic corporation that’s registered somewhere in the United States
Offer a single class of stock to your shareholders
Have no more than 100 S corporation shareholders, who can only be individuals, estates, or certain types of trusts
Are taxes for LLCs and S corps the same?
No, as LLCs pay varying levels of Business Profits Tax based on their income.
What is the S corp tax rate?
New Hampshire applies a Business Profits Tax of 7.6% to S corps in the state.
How do I dissolve an S corporation in New Hampshire?
You must complete a Certificate of Dissolution or a Certificate of Cancellation, which you submit to the New Hampshire Department of State.
Bibliography
Internal Revenue Service. “S Corporations.” Accessed March 27, 2023.
New Hampshire Department of Revenue Administration. “Frequently Asked Questions – Business Profits Tax.” Accessed March 27, 2023.
Internal Revenue Service. “S corporations.” Accessed March 27, 2023.
New Hampshire Secretary of State. “Domestic and Foreign Limited Liability Company.” Accessed March 27, 2023.
New Hampshire Secretary of State. “Trade Name Forms and Laws.” Accessed March 27, 2023.
New Hampshire Secretary of State. “Trademark That!” Accessed March 27, 2023.
New Hampshire Secretary of State. “Domestic Forms.” Accessed March 27, 2023.
New Hampshire Secretary of State. “Articles of Incorporation.” Accessed March 27, 2023.
New Hampshire Secretary of State. “File an Annual Report.” Accessed March 27, 2023.
Internal Revenue Service. “About Form 2553, Election by a Small Business Corporation.” Accessed March 27, 2023.
Internal Revenue Service. “About Form 8832, Entity Classification Election.” Accessed March 27, 2023.
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