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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.

Optimal Statistical Incorporation of Independent Feature Stability Information into Radiomics Studies

Conducting side experiments termed robustness experiments, to identify features that are stable with respect to rescans, annotation, or other confounding effects is an important element in radiomics ...

Published:  Mon, 20 Jan 2020 02:15:00 GMT



Hearing Aids Market - Growth, Trends & Forecasts (2020-2025): Incorporation of Lithium-Ion Batteries in Hearing Aids Presents Lucrative Opportunities

There are various opportunities, like the incorporation of lithium-ion batteries in hearing aids, which help in propelling this market's growth. Furthermore, technological developments related to the ...

Published:  Tue, 21 Jan 2020 16:54:00 GMT



LISTEN: The Commute, Jan. 20: Rep. Jesse Petrea on islands incorporation, Legislature's first week

Ben Watson's decision not to pursue incorporation for the so-called Chatham Islands, which include Wilmington, Whitemarsh, Oatland and Talahi Islands. The Commute is presented by National Office ...

Published:  Mon, 20 Jan 2020 13:26:00 GMT



World 5G Testing Equipment Industry Report 2019 - Affordability of Testing Equipment is a Key Challenge

5G deployments are an important trend in the telecom industry. The deployments call for substantial incorporation of network virtualization as the entire 5G spectrum can be split into several ...

Published:  Thu, 23 Jan 2020 02:03:00 GMT



Incorporation veil no longer a safe refuge for rogue directors

A report by Mr Kahi indicates former Chief Executive Officer Atul Shah and his son Ankoor Shah are among family members who obtained interest-free loans to the tune of approximately Sh1 billion. Mr ...

Published:  Sat, 18 Jan 2020 16:32:00 GMT



Digital PCR (dPCR) & Real-Time PCR (qPCR): Global Market Study 2019-2025 - Incorporation of Novel qPCR Products is Propelling Market Growth

DUBLIN, Jan. 14, 2020 /PRNewswire/ -- The "Global Digital PCR (dPCR) and Real-Time PCR (qPCR) Market 2019-2025" report has been added to ResearchAndMarkets.com's offering. The digital PCR and ...

Published:  Tue, 14 Jan 2020 16:08:00 GMT



Kazakhstan Energy Reinsurance Company Moves Incorporation from Bermuda to Astana Financial Services Authority

KERC has been operating out of Bermuda since 2004 and transferred its incorporation to Kazakhstan. The shareholder of KERC is a Cooperative KuzMunaiGaz U.A., which is registered outside of Kazakhstan.

Published:  Tue, 21 Jan 2020 11:25:00 GMT



Graficar Secures a Competitive Edge with Rapida 105 PRO

Since the incorporation of publishing house Znanje d.o.o. and its printing facility, it has furthermore ventured into book production and is in the meantime also offering its services as a supplier of ...

Published:  Thu, 23 Jan 2020 03:10:00 GMT



Dr. Burris on the Incorporation of Biosimilars in Oncology

Howard "Skip" A. Burris, III, MD, chief medical officer and president, Clinical Operations, Sarah Cannon Research Institute, 2019 ASCO president-elect, and a 2014 Giant of Cancer Care® in Drug ...

Published:  Fri, 10 Jan 2020 10:34:00 GMT



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