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What are the Main Differences between an LLC and an S-Corp?

What Is a C-Corporation?

What Is an LLC?

What Is an S-Corp?

Which Type of Company Incorporation is Right for You?

 

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What Is an S-Corp?

When you’re establishing a business – setting up for yourself, as they used to say – you have a number of tax and legal structures from which to choose. Among them are the sole proprietorship, the partnership, the limited liability corporation (LLC), the C-corp and the S-corp. Of these, the S-Corp is the sole choice that depends wholly on an Internal Revenue Service election. In fact, you can even choose S-Corp status for an LLC. But we’re getting ahead of ourselves.

What Is an S-Corp?
An S-corp is a corporation whose owners choose the IRS designation, “Subchapter S.” Choosing this designation allows you to sidestep federal corporate taxation. Instead, your shareholders declare company profits – or losses -- when they file their personal tax returns. If you, as the owner/shareholder, also work for the company, the IRS requires that you pay yourself a salary. If that agency determines that your salary is unreasonably low, while the company earnings you report on your tax return are high, you might get into hot water.

Becoming an S-Corp
As you might imagine, with such tax benefits to hand, you have to jump through some hoops to be eligible for Subchapter S designation. First of all, your company must be a corporation. Rules for corporate filing vary by state, but typically, corporate status requires filing articles of incorporation with the appropriate agency, usually the state secretary of state’s office. You may also need to file by-laws, to include the schedule for shareholder meetings. Other steps may also be required.

In addition, your company can have no more than 100 shareholders. A married couple – an owner and her husband, for example -- is treated as a single shareholder under IRS rules. You cannot have another corporation act as a shareholder if you want to claim S-corp status. A non-profit organization, on the other hand, is considered an eligible shareholder.

You’ll need to get a tax ID number from the IRS. This number identifies you to the agency and is the number your accountant will use when she files your business tax returns.

Moreover, each one of your shareholders must notify the IRS that he has chosen the Subchapter S designation for the company. Whether they work for the corporation or not, all must file IRS Form 2553.

Of course, you’ll also have to get the proper licenses and permits for your business. The U.S. government, your state, city and even county may each have a separate set of licensing regulations. Abide carefully by all the rules that apply to your business and its location.

Taxation
Some states are not as liberal as the federal government when it comes to S-corp taxation. Consequently, if you live in a state such as Massachusetts, you might have to pay state taxes on profits that exceed a certain limit. If your business is in New York or New Jersey, you’ll have to file a state corporate tax return just as any C-corporation would.

An S-corp is a corporate structure that offers significant tax advantages. Consult knowledgeable legal and tax professionals to determine if the Subchapter S designation is appropriate for your business.

Telltale Games Hit With Layoffs, Majority Closure (UPDATED)

Telltale Games has been a mainstay of the narrative-driven gaming landscape ever since its 2004 incorporation by former LucasArts developers. Known for its smart, episodic adventures based on ...

Published:  Fri, 21 Sep 2018 16:01:00 GMT



CLPS Incorporation to Announce Fiscal Fourth Quarter and Full Year 2018 Financial Results

SHANGHAI, Sept. 20, 2018 /PRNewswire/ -- CLPS Incorporation (Nasdaq: CLPS) ("CLPS" or "the Company"), a leading information technology consulting and solutions service provider focusing on the ...

Published:  Thu, 20 Sep 2018 07:15:00 GMT



Cosmetics Market is Anticipated to Grow USD$ 390 Billion Globally by 2023

Key players profiled in the report include L'Oreal, Avon Incorporation, Procter and Gamble (P&G), Unilever, Oriflame, Revlon, Incorporation, Kao Corporation, Estee Lauder Companies Incorporation, Shis...

Published:  Sat, 22 Sep 2018 03:26:00 GMT



15 migrants arrested secondary to sweep

Officials spoke in general terms about the incorporation of immigration authorities with the drug investigation, which commenced in July and came to a head this week, resulting in 1,260 total arrests ...

Published:  Sat, 22 Sep 2018 01:06:00 GMT



Simplex Castings Ltd. - Intimation Of Incorporation Of Wholly Owned Subsidiary Company

We wish to inform you that the Company has incorporated an wholly owned subsidiary Company Simplex Castings International Pte. Ltd. at Singapore on 12th September, 2018. The details as required under ...

Published:  Thu, 13 Sep 2018 06:37:00 GMT



New Incorporation St Peter & St Paul Benevolent Society - Valentine Haremski

H. L. Worthington. W. W. P. Ketcham. Escanaba: L. B. Shepard. Ford River; Pier: Carrier. Frankfort: Kate Dar ley. Alpena. THE COURTS. Court of Illinois. Is.iSPecial.)--The proceedings Court today were ...

Published:  Sun, 16 Sep 2018 09:19:00 GMT



UNGA and Zim's international incorporation

The inauguration of President Emmerson Mnangagwa that came through the birth of the second republic, brought in the dawn of a new era as his main message has been centred on re-engagement and ...

Published:  Thu, 20 Sep 2018 03:55:00 GMT



Chegg, Inc. (NYSE:CHGG) Files An 8-K Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

Item 5.03Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. (a)On July30, 2018, the Board of Directors (the "Board" ) of Chegg, Inc. ("Chegg" ) determined it was in ...

Published:  Fri, 21 Sep 2018 00:02:00 GMT



The Woodlands Township invites residents to incorporation public forum Sept. 25

THE WOODLANDS, Texas -- The Woodlands Township Board of Directors invites residents to an Incorporation Planning Study Public Forum on Tuesday, September 25, 2018, from 6:30 to 9:30 p.m. at The Woodla...

Published:  Fri, 14 Sep 2018 05:58:00 GMT



Former Suisun mayor remembers city's last incorporation celebration

SUISUN CITY - It was Crystal School custodian Everett Mackie's eighth-grade son who came up with the winning design. City leaders were casting about for a way to honor the city's 100th anniversary in ...

Published:  Wed, 12 Sep 2018 05:43:00 GMT



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