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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.

Expert Highlights Incorporation of Neoadjuvant Endocrine Therapy Into ER+ Breast Cancer

Neoadjuvant endocrine therapy is well utilized in Europe but underutilized in the United States, says Hung T. Khong, MD. Many factors are at play, but they can be boiled down to physicians' familiarity with chemotherapy in the treatment of patients with ...

Published:  Wed, 25 Apr 2018 06:13:00 GMT



Global Biosensors Market 2018-2027: Rising Geriatric Population and Rapid Incorporation of Biosensing Technologies in Non-Medical Applications

The "Global Biosensors Market - Analysis and Forecast (2018 -2027) (Focus on Product, Application, 19 Countries Analysis, and Competitive Landscape)" report has been added to ResearchAndMarkets.com's offering. The global biosensors market was valued $1.46 ...

Published:  Wed, 25 Apr 2018 06:22:00 GMT



Global Ad Spending Market - Incorporation of AR to Boost Growth | Technavio

LONDON--(BUSINESS WIRE)--The latest market research report by Technavio on the global ad spending market predicts a CAGR of around 5% during the period 2018-2022. The report segments the global ad spending market by application (digital, TV, print, and OOH ...

Published:  Wed, 18 Apr 2018 12:42:00 GMT



Datasea Inc. (OTCMKTS:DTSS) Files An 8-K Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

Datasea Inc. (OTCMKTS:DTSS) Files An 8-K Amendments to Articles of Incorporation or Bylaws; Change in Fiscal YearItem 5.03Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year On April 16, 2018, Datasea Inc. (the "Company" ) filed a ...

Published:  Mon, 23 Apr 2018 02:28:00 GMT



Corporate Services Singapore Explains Why Singapore is Ideal for Company Incorporation

Singapore offers a pro-business environment that is attractive to both domestic and foreign firms, says, incorporation firm - Corporate Services Singapore. "Asia is starting to evolve at a rapid pace, accounting for some of the world's largest consumer ...

Published:  Sun, 22 Apr 2018 01:11:00 GMT



Why incorporation isn't always a magical tax fix

Q: My wife and I are looking to retire in about five years or so. I am 55 and she is 52 and we are debt free. My question is: my wife recently started to work for herself designing kitchens and we were wondering tax-wise if it is better to claim this as ...

Published:  Wed, 18 Apr 2018 10:27:00 GMT



JIT head says no evidence of Maryam's role in incorporation of BVI companies

ISLAMABAD: JIT head Wajid Zia admitted on Friday that no evidence pointing to Maryam Nawaz's involvement in the incorporation of Nelson and Nescol offshore companies was available. The revelation came as the accountability court presided by Judge ...

Published:  Fri, 13 Apr 2018 15:43:00 GMT



Corporate Affairs Ministry's incorporation certificate proof of PAN/TAN

The government said the Certificate of Incorporation (COI), issued by the Ministry of Corporate Affairs, is adequate proof of PAN or TAN for a company.IANS | April 14, 2018, 19:52 IST In case of a company, an application for incorporation, allotment of PAN ...

Published:  Sat, 14 Apr 2018 07:27:00 GMT



Reliable incorporation between drug and packaging - navigating injection technologies

SMi Group reports: With updates on the recent developments in the Pre-Filled Syringes industry, and the ever-increased net worth of the medical devices market within the US especially, SMi's PFS West Coast Conference (June, San Diego, USA) will provide ...

Published:  Fri, 13 Apr 2018 02:09:00 GMT



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