S Corporation

Starting Your Business

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What Is An S-Corporation?
All Corporations start out as a regular Corporation. By filing form 2553 with the IRS you are electing to meet the requirements for an S-Corporation. Essentially, an S-Corporation is treated like a partnership for tax purposes, but it has all the limited liability protection of a regular Corporation. S-Corporations, however, do not have many of the fringe benefits that regular Corporations do.

Tax:
An S-Corporation is a pass-through entity. This means profits and losses pass through to the shareholders.

Asset Protection:
An S-Corporation provides the same liability protection as a regular C-Corporation.

Quick Benefits List:
Tax Savings
Asset Protection

Disadvantages:
There are certain restrictions that must be met to qualify as an S-Corporation:
100 or fewer shareholders
You can only issue one class of stock
Shareholders must be U.S. Citizens or U.S. residents, estates, certain trusts, banks and certain exempt organizations, not C-Corporations
If you are a greater than 2% shareholder of an S-Corporation, certain benefits available to you may be limited.