S Corporation

Keyincorporators.com covers all the bases. Created with the assistance of an attorney, we provide the complete package for a S Corporation.

An S corporation is a corporation that has elected a special tax status with the IRS. This tax treatment allows the income of the corporation to be treated like the income of a partnership or sole proprietorship; the income is "passed-through" to the shareholders. The pass through taxation of an S corporation offers a great advantage over C corporations which may be subject to double taxation.

That is, a C Corporation, for any profits generated, is first taxed at the corporate level. Thereafter, when a shareholder receives a distribution of those profits, they are taxed at the personal level. Hence, the term "double taxation".

An S corporation, on the other hand, allows income, deductions, and losses to be passed through the S corporation to the individual tax return of each shareholder. This is the essence of "pass-through" taxation, i.e., the income is passed through to the shareholders. Therefore, the shareholder's individual tax returns report the income or loss generated by an S corporation. In order to avoid double taxation, a large number of our clients elect to be treated as an S Corporation.

S Corporation Advantages:

• Allows for pass through taxation and avoidance of double taxation.
• Protects owners from personal liability.
• Certain business expenses may be tax deductible.
• Makes it easier to raise investment capital.
• Exists beyond the life of the owner.
• Offers professional appearance to prospective customers.

Note: In order to qualify for S corporation status, shareholders must number fewer than 75. These shareholders must be individuals. Furthermore, the shareholders can not be non-resident aliens.