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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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TopConsumerReviews.com provides unique articles that you won't find anywhere else on the internet. These articles are designed to help you make the most informed decisions possible.

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.

CLPS Incorporation's Blockchain Passes University Testing

SHANGHAI, Jan. 16, 2019 /PRNewswire/ -- CLPS Incorporation (the "Company" or "CLPS") (Nasdaq: CLPS), a leading information technology ("IT") consulting and solutions service provider focusing on the b...

Published:  Wed, 16 Jan 2019 04:30:00 GMT



Holyrood's come home year coincides with 50th anniversary of incorporation

Pictured at the signing of a proclamation recognizing the Town of Holyrood's 50th anniversary since incorporation are the town's mayor and members of the committee planning for celebrations this summe...

Published:  Wed, 16 Jan 2019 12:23:00 GMT



2019 Look Ahead: Woodlands narrows focus of incorporation, set to open adventure park

The Woodlands Township will in a few months have a unique new recreational option for residents and visitors - a high-ropes tree-based obstacle course with more than 60 features. Called Texas TreeVent...

Published:  Sat, 05 Jan 2019 08:19:00 GMT



Town, City incorporation costs nearly half a million

BELOIT - Town of Beloit and City of Beloit officials have each spent more than $200,000 on the incorporation process. Since 2013, the Town of Beloit has spent $227,503.95 on incorporation, which mostl...

Published:  Thu, 10 Jan 2019 06:24:00 GMT



Islanders hold task force meeting to prep for possible incorporation

The islands are still working to become their own entity. Starting a new city means there is a lot of ground to cover and they're trying to make sure they do it the right way. In November they learned ...

Published:  Mon, 07 Jan 2019 19:22:00 GMT



Equatorial Guinea moves to support prospective entrepreneurs by cutting bureaucratic obstacles with a One-Stop Shop for business incorporation

Equatorial Guinea's one-stop shop became a reality this week, allowing investors and corporations alike to set up a business in sub-Saharan Africa's fourth largest oil producer in only seven days. The ...

Published:  Tue, 15 Jan 2019 03:30:00 GMT



Liht Cannabis Corp. Secures Exclusive Canadian Rights to Proprietary Technologies for the Quality Cultivation and Tracking of Cannabis

The incorporation of this technology will save millions of dollars in potential losses and has been specifically designed to increase organic plant health, vibrancy, yield production and enable ...

Published:  Thu, 17 Jan 2019 05:20:00 GMT



Town of Beloit to form committee to discuss next move for incorporation

The town of Beloit plans to form a committee to review a state board's decision last month to deny the town's incorporation petition, the town administrator said Monday night. The state Incorporation ...

Published:  Tue, 08 Jan 2019 02:18:00 GMT



The Incorporation Of Technology In Future Games

Games today offer a more immersive experience through the newest technological innovations. But if you think that 3D graphics is already cutting-edge, think again; future technologies will soon allow ...

Published:  Sun, 06 Jan 2019 16:54:00 GMT



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