TopConsumerReviews.com is a world-leading consumer product review site. We provide detailed reviews and ratings for thousands of products and services.

 

Go To Reviews >

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.

Go To Reviews >

Top Consumer Reviews Articles

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.


Company Incorporation In The News

White House Drafts Antitrust Order to Investigate Google and Facebook's Business Practices

(Bloomberg) - The White House has drafted an executive order for President Donald Trump's signature that would instruct federal antitrust and law enforcement agencies to open investigations into the b...

Published:  Sat, 22 Sep 2018 16:11:00 GMT



Building the future on a foundation of the past: The 166-year Decatur legacy of Woare's Inc.

DECATUR - The weight of time-honored tradition bears down on the leaders of Woare's Inc. like a ton of bricks ... in the brick and building things business since its founding in 1852.

Published:  Sat, 22 Sep 2018 12:00:00 GMT



Architecture: Eva Gray, Jennifer Tiertz and Steve Montee; KKT ARCHITECTS, INC.

She is looking forward to working with KKT as KKT serves the community. The new cost for doing business in Tulsa. For those who care about business and this community, we have a deal for you. Start a ...

Published:  Sat, 22 Sep 2018 22:30:00 GMT



FANH LOSS NOTICE: Rosen Law Firm Reminds Fanhua Inc. Investors of Important Deadline in Class Action - FANH

NEW YORK--(BUSINESS WIRE)--Rosen Law Firm, a global investor rights law firm, reminds purchasers of the securities of Fanhua Inc. (NASDAQ:FANH) from April 20, 2018 through August 27, 2018, both dates ...

Published:  Sat, 22 Sep 2018 10:00:00 GMT



OPK LOSS NOTICE ALERT: Rosen Law Firm Files Securities Class Action Lawsuit Against OPKO Health, Inc.; Important Deadline - OPK

22, 2018 /PRNewswire/ -- Rosen Law Firm, a global investor rights law firm, announces it has filed a class action lawsuit on behalf of purchasers of the securities of OPKO Health, Inc. (NASDAQ ...

Published:  Sat, 22 Sep 2018 13:00:00 GMT



An iPhone XS Max Teardown Reveals Apple's Tiny A12 Bionic Chip

The manufacturer is almost certainly Taiwan Semiconductor Manufacturing Company (NYSE:TSM), since it's the only company currently mass-producing 7nm chips. Thanks to a teardown report from TechInsight...

Published:  Sat, 22 Sep 2018 11:10:00 GMT



Delta to launch first U.S. biometric terminal in Atlanta

Delta Air Lines Inc. announced Thursday it will launch the first biometric terminal in the U.S. at Maynard H. Jackson International Terminal in Atlanta. "One look and you are on your way," said Delta ...

Published:  Fri, 21 Sep 2018 04:09:00 GMT



American Water Works Company Inc (AWK) Shares Bought by California Public Employees Retirement System

California Public Employees Retirement System increased its stake in shares of American Water Works Company Inc (NYSE:AWK) by 20.1% in the second quarter, according to the company in its most recent f...

Published:  Sun, 23 Sep 2018 01:56:00 GMT



EPS for American Electric Power Company, Inc. (AEP) Expected At $1.15

Investors sentiment decreased to 0.78 in 2018 Q2. Its down 0.10, from 0.88 in 2018Q1. It worsened, as 47 investors sold American Electric Power Company, Inc. shares while 293 reduced holdings. 64 fund...

Published:  Sat, 22 Sep 2018 16:23:00 GMT




- View Full Site -