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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.

Statistical Natural Language Processing Market to Make Great Impact in Near Future by 2025 | Apple Incorporation, Dolbey Systems, Google

Nov 10, 2018 (Heraldkeeper via COMTEX) -- HTF MI released a new market study on Global Statistical Natural Language Processing Market with 100+ market data Tables, Pie Chat, Graphs & Figures spread th...

Published:  Fri, 09 Nov 2018 23:21:00 GMT



This Desert Life: Incorporation or bust

To incorporate or not to incorporate, that was the question town residents had to answer in 1988. They chose the former, passing what was known as Measure K, which grabbed 84 percent of the vote on No...

Published:  Thu, 08 Nov 2018 14:38:00 GMT



Election 2018: Woodlands candidates discuss finer points of incorporation

Francis "Frank" Dargavage, a candidate for The Woodlands Township Board of Directors. He is challenging incumbent Bruce Rieser in the Nov. 6, 2018, township election, for the Position 4 seat. Francis ...

Published:  Wed, 31 Oct 2018 11:02:00 GMT



Kadesh Incorporation Issues Voluntary Nationwide Recall of Puriton Eye Relief Drops Due to Non-Sterile Production Conditions

Kadesh, Inc. of Garden Grove, CA is voluntarily recalling all lots of Puriton Eye Relief Drops, 0.5 oz. (15ml) bottle, UPC 7 36972 1679 0, to the consumer level. During a recent FDA inspection, invest...

Published:  Wed, 07 Nov 2018 11:44:00 GMT



FebriDx® Receives Updated CE Mark to Allow Incorporation of All-in-One Test Format

SARASOTA, Fla.--(BUSINESS WIRE)--RPS Diagnostics, Inc. (RPS®) today announced an updated CE mark of its FebriDx® test, clearing the way for its immediate launch in the European Union and all countries ...

Published:  Tue, 30 Oct 2018 13:41:00 GMT



Evergy, Inc. (EVRG) Q3 2018 Earnings Conference Call Transcript

Good day, ladies and gentlemen, and welcome to the Evergy Incorporation Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a questi...

Published:  Thu, 08 Nov 2018 09:12:00 GMT



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