Starting an S corporation (S corp) in Louisiana is easy, and electing an S corp tax designation could potentially save your business money in taxes. Our guide will walk you through the process of starting your Louisiana S corporation and provide you with tips on maintaining your S corp.
Want to form an S corp elsewhere? Check out our other How to Start an S corp guides to learn more.
We recommend using a professional formation service like Tailor Brands to get your S corp up and running in no time.
Factors to Consider Before Starting an S Corp in Louisiana
Before forming an S corp, you have to consider the following factors:
- Is an S corporation the best strategy for your business?
- S corporation restrictions
- Are S corp tax advantages right for you?
Is an S Corporation the Best Strategy for Your Business?
For help with choosing the right structure for your business, visit our Choosing a Business Structure guide.
S Corporation Restrictions
S corps have several restrictions, such as being limited to one class of stock and 100 shareholders. Read our What Is an S Corporation guide for full details.
Are S Corp Tax Advantages Right for You?
An S corporation is a tax designation that can be elected by an LLC or corporation. With an S corp, business owners are considered employees of the company and must receive a reasonable salary. Since all S corps technically have employees, the s corp must run payroll.
In order to benefit from a Louisiana S corp tax designation, your business needs to make enough money to offset payroll expenses. Furthermore, S corps are beneficial for business owners who take large distributions in addition to their salary.
How to Form a Louisiana S Corp
There are two main ways to start an S corp:
- By forming an LLC and electing S corp tax status from the IRS when you request your employee identification number (EIN)
- By forming a corporation and electing S corp status from the IRS
We recommend not starting a corporation with the S corp tax status because the S corp negates all of the benefits of a corporation.
Recommended: If you have an existing LLC, visit our How to Convert an LLC to S Corp guide.
Steps for Forming an LLC and Electing S Corp Status in Louisiana
Starting a Louisiana LLC and electing S corp tax status is easy. You can use our guides to start an LLC with the S corp status yourself, or you can hire a service provider like Tailor Brands to guide you through this process.
There are five basic steps to start an LLC and elect S corp status:
Step 1: Name Your LLC
Step 2: Choose a Registered Agent
Step 3: File the Articles of Organization
Step 4: Create an Operating Agreement
Step 5: Get an EIN and File Form 2553 to Elect S Corp Tax Status
Step 1: Name Your LLC
Choosing a company name is the first and most important step in starting your LLC in Louisiana.
Be sure to choose a name that complies with Louisiana naming requirements and is easily searchable by potential clients.
1. Follow the naming guidelines for a Louisiana LLC:
- Your name must include the phrase “limited liability company” or the abbreviations LLC or LC.
- Your name cannot imply that the LLC is organized for any unlawful purpose or one not outlined in its Articles of Organization.
- You must have approval to include certain words:
- You must have approval from the Louisiana Professional Engineering and Land Surveying Board to include the words "engineer," "engineering," "surveyor," "surveying," (or any variations).
- You must have approval from the Louisiana Commissioner of the Office of Financial Institutions to include any of the following words: bank, banker, banking, savings, safe deposit, trust, trustee, building and loan, homestead, or credit union.
- Your name cannot include the word “insurance” unless the LLC is an independent insurance agency or brokerage firm.
- Your name cannot contain the phrase "doing business as" or the abbreviation "d/b/a".
- Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
- Your name must be distinguishable from any existing business in the state. This includes Louisiana reserved names.
- Names of low-profit limited liability companies must have the words "low-profit limited liability company," the abbreviation "L3C," or the abbreviation "l3c."
You can also read the Louisiana state statute about LLC naming guidelines for more information.
2. Is the name available in Louisiana? You can use the business filings search on the Louisiana Secretary of State website to see if your desired LLC name is available.
3. File a Louisiana Name Reservation Form: You must file a Name Reservation Form online or via hard copy before registering an LLC in Louisiana online. Once your reservation is approved, you must apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) prior to formation.
4. Is the URL available? We recommend checking to see if your business name is available as a web domain. Even if you don't plan to create a business website today, you may want to buy the URL in order to prevent others from acquiring it.
Find a Domain Now
Step 2: Choose Your Louisiana Registered Agent
You must elect a registered agent for your Louisiana LLC.
An LLC registered agent will accept legal documents and tax notices on your LLC's behalf. You will list your registered agent when you file your LLC's Articles of Organization.
Many business owners choose to hire a registered agent service. Many of these services will form your LLC for a small fee and include the first year of registered agent services for free.
Louisiana Registered Agent Consent to Appointment
Registered agents in Louisiana must consent to their appointment by signing the LLC’s Articles of Organization in front of a notary public.
Step 3: File the Louisiana LLC Articles of Organization
The Louisiana Articles of Organization is used to officially register an LLC.
OPTION 1: File Online With Louisiana geauxBIZ
- OR -
OPTION 2: File by Mail, by Fax, or in Person
State Filing Cost: $100, payable to the Secretary of State (Nonrefundable)
State of Louisiana Secretary of State
P.O. Box 94125
Baton Rouge, LA 70804
Louisiana Secretary of State
8585 Archives Ave.
Baton Rouge, LA 70809
Fax: (225) 932-5314
Step 4: Create an LLC Operating Agreement
An LLC operating agreement is a legal document that outlines the ownership and member duties of your LLC.
For more information, read our Louisiana LLC Operating Agreement guide.
Our operating agreement tool is a free resource for business owners.
Step 5: Get an EIN and Complete Form 2553 on the IRS Website
An EIN is a number that is used by the US Internal Revenue Service (IRS) to identify and tax businesses. It is essentially a Social Security number for a business.
EINs are free when you apply directly with the IRS.
If you are filing your LLC online, getting an EIN is included in the registration process on geauxBIZ.gov.
Elect S Corp Tax Status
During the online EIN application, the IRS will provide a link to Form 2553, the Election By a Small Business form.
Visit our Form 2553 Instructions guide for detailed help with completing the form.
This is the form to elect S corp tax status for your LLC:
Ready to start saving on your taxes?
We recommend using a formation service to start your Louisiana S corp for you, so you can focus on the things that matter most — growing your business.
Keep Your Louisiana S Corp Compliant
After filing all the necessary formation paperwork, it’s important that you keep your business in good standing with the state of Louisiana. In order to do this, you will need to file an annual report, register your business with the state, and pay all required taxes.
Louisiana S Corp Annual Report
Every year your Louisiana S corporation must file an annual report with the Secretary of State. This report is used to keep the state up to date with any changes to your business and ensures that the state has accurate information for contacting your business.
Regardless of whether your business is profitable or has recently undergone any changes, you will need to file your annual report each year by the date you initially registered your business with the state. Since your business is an LLC taxed as an S corporation, this date is the date you registered your LLC, not the date you elected to be taxed as an S corporation.
Louisiana S Corp Taxes
S corporations benefit from pass-through taxation, meaning the business’s profits pass-through to S corp owners’ individual tax returns. S corp owners make money from their reasonable salary and distributions, and Louisiana S corp owners will need to pay various taxes.
Federal Self-Employment Taxes
Self-employment taxes cover social security and medicare. The self-employment tax rate is 15.3%, and money you take as salary will be subjected to the self-employment tax. However, distributions are not subjected to this tax.
Federal Income Taxes
Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets as well as the percent owed will change each year. Both your salary and distributions are subjected to federal income tax.
Louisiana Income Taxes
Louisiana’s income tax rates range from 1.85% to 4.25% depending on your individual income tax bracket. Relative to other states, Louisiana’s income tax rate is fairly low. Some states have income tax rates higher than 10% and other states have rates of 0%.
Register Your Business With the Louisiana Department of Revenue
You’ll need to get a business account with the Louisiana Department of Revenue and register your business with the state of Louisiana.
Louisiana Sales and Use Tax
Louisiana has a state sales tax rate of 4.45%. Many local jurisdictions have an additional sales tax rate that must be paid in addition to this, but local sales tax rates are capped at 7%. Compared to most states, Louisiana has a fairly high sales tax rate that can be over 10% once the local sales tax is factored in.
Additional State Taxes
Louisiana’s Department of Revenue has numerous state taxes your business may be required to pay depending on your business’s number of employees, location, and industry.
Here are some examples of taxes business owners may have to pay in Louisiana:
- Hazardous waste disposal tax
- Alcoholic beverage tax
- Transportation and communication tax
- Tobacco tax
- Excise tax
Visit the Louisiana Department of Revenue website for more information.
Louisiana Local Taxes
Local jurisdictions often levy their own taxes and have laws that may impact your business. If you’re in New Orleans, Baton Rouge, or even a smaller, less known city, we recommend you familiarize yourself with your local jurisdiction and research any laws that may impact your ability to do business.
Start an S Corp FAQ
What is an S corp?
An S corporation (S corp) is a tax designation for which an LLC or a corporation can apply.
Are taxes for LLCs and S corps the same?
No. The default taxes for an LLC and taxes for an S corp are not the same.
With an S corp, owners pay personal income tax and self-employment tax on a predetermined salary. They may then withdraw any remaining profits from the business as a “distribution,” which isn’t subject to self-employment tax.
With an LLC, all company profits pass through to the owners’ personal tax returns, and then the owners must pay personal income tax and self-employment tax on the entire amount.
What is a reasonable salary for an S corp?
S corp owners are required to earn a “reasonable” salary, which basically means a fair market rate based on the individual’s qualifications as well as their duties and responsibilities at the company. The purpose of this requirement is to prevent S corp owners from paying themselves an artificially low salary in order to pay less self-employment tax.
What is a distribution?
A distribution is a dividend that a shareholder/owner can take from the business profits that remain after a company pays all of its employee salaries. Shareholders must pay personal income tax on distributions, but distributions aren’t subject to self-employment tax.
Can I still use my DBA name if I elect to be an S corp?
LLCs and corporations that operate under a “doing business as” (DBA) name can choose the S corp election.