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Related Articles

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.

Give Navarre incorporation a chance. Here's what you need to know | Guestview

There's a new day ahead for Navarre. A day when people living here are in control of our community's land development, economic growth, traffic, road paving and government spending. A day when our ...

Published:  Mon, 19 Aug 2019 04:07:00 GMT



'College life wasn't a fairy tale before incorporation'

Nothing's as good as it used to be. D'you remember way back when everybody worked hard for an honest living, there were only three channels on the telly, and paedophiles hadn't been invented? D'you ...

Published:  Sat, 10 Aug 2019 01:07:00 GMT



Greenville's petition for incorporation dismissed by review board

GREENVILLE - The town's petition to incorporate as a 36-square-mile village was dismissed Wednesday, but the Wisconsin Incorporation Review Board has given the town one year to refile the petition ...

Published:  Wed, 14 Aug 2019 14:56:24 GMT



Medical Professional Reimbursement and "Fraudulent Incorporation'

The No-Fault Regulations, 11 NYCRR 65-3.16(12), provide: A provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to ...

Published:  Wed, 07 Aug 2019 09:11:00 GMT



Corporate Training Market in United States, 2019-2023 - Growing Incorporation of Geofencing in Corporate Training - ResearchAndMarkets.com

DUBLIN--(Business Wire)--The "Corporate Training Market in US 2019-2023" report has been added to ResearchAndMarkets.com's offering. Corporate training includes a range of activities that are focused ...

Published:  Mon, 19 Aug 2019 09:55:00 GMT



LLC Versus Incorporation: Which Should I Choose?

The decision to form either a limited liability company (LLC) or a corporation depends on the type of business an individual is creating, the possible tax consequences of forming the corporate entity, ...

Published:  Wed, 14 Aug 2019 14:40:00 GMT



Incorporation of IofinaEX Global

Iofina plc, specialists in the exploration and production of iodine and manufacturers of specialty chemical products, is pleased to announce the incorporation and launch of a subsidiary company ...

Published:  Tue, 13 Aug 2019 00:17:00 GMT



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