Client Login
MahoneySabol
  • About
    • News
  • Industries
    • Breweries
    • Construction and Real Estate
    • Dealerships
    • Employee Benefit Plans
    • Government
    • Hi-Tech
    • Manufacturing and Distribution
    • Not-For-Profit
    • Professional Services
    • Renewable Energy
    • Retail and E-commerce
    • Sports and Entertainment
  • Services
    • Assurance
    • Business Valuation
    • Consulting
    • Fraud and Forensics
    • International
    • Outsourced Accounting
    • SEC / PCAOB
    • Tax
    • Trusts and Estates
    • Wealth Management
  • Our People
  • Blog
  • Careers
  • Contact
MahoneySabol
Login
  • About
    • News
  • Industries
    • Breweries
    • Construction and Real Estate
    • Dealerships
    • Employee Benefit Plans
    • Government
    • Hi-Tech
    • Manufacturing and Distribution
    • Not-For-Profit
    • Professional Services
    • Renewable Energy
    • Retail and E-commerce
    • Sports and Entertainment
  • Services
    • Assurance
    • Business Valuation
    • Consulting
    • Fraud and Forensics
    • International
    • Outsourced Accounting
    • SEC / PCAOB
    • Tax
    • Trusts and Estates
    • Wealth Management
  • Our People
  • Blog
  • Careers
  • Contact
Know The Advantages of S Corporations

Know The Advantages of S Corporations

byVernon Howard inBlog / Articles posted onApril 7, 2019
0
1

S corporations are entities that can pass corporate income, losses, deductions and credits through to shareholders for federal tax purposes. This article will outline the advantages and considerations you should take when considering becoming an S corporation.

Shareholders report the flow-through of income and losses on their personal tax returns and are assessed a tax at their individual income tax rates. An S corporation offers investment opportunities from the sale of stock and the coveted protection of limited liability which means that company directors, officers, shareholders and even employees can enjoy limited liability protection, and your business can continue to exist even if the owner leaves or dies. In addition, S corporations have to file taxes only yearly and not quarterly like C corporations.

In order to be considered an S corporation, your company must meet the following requirements:

  • Be a domestic corporation.
  • Have only allowable shareholders: individuals and certain trusts and estates, but not partnerships, corporations and nonresident aliens.
  • Have no more than 100 shareholders.
  • Have only one class of stock.
  • Not be an ineligible corporation, such as certain financial institutions, insurance companies and domestic international sales companies.

If you meet these qualifications, you will have to take a number of formal steps to become an S corporation. You have to choose a legal name and reserve it, apply for a business license and other certificates specific to your industry, and obtain an Employer Identification Number. Rules may vary depending on the jurisdiction.

Despite the pass-through advantages, S corporations still have to meet certain responsibilities, such as preparing and filing income tax and estimate tax forms which can be especially complicated. They also are responsible for Social Security and Medicare taxes, federal unemployment taxes, and relevant excise taxes. In addition, individual S corporation shareholders are responsible for income and estimated taxes. Other considerations include:

  • You cannot expand with international ownership. Citizens and permanent residents only.
    With the 100-shareholder limit, there may be practical limits on growth.
  • The IRS can be fussy: Any errors among the various filing requirements can inadvertently result in the termination of S corporation status. Indeed, the IRS typically looks very closely at S corporation filings, making sure there’s a clear line between salaries and dividends, as they are taxed differently. Be prepared for detailed IRS scrutiny in this area.

The S corporation is just one of a number of ways to organize your business. To figure out if it right for your company, we can help walk you through the financial and practical details.

industries
Share:

Previous

Capital Gains and Losses: How Do They Work?

Next

401(k) and IRA Contribution Limit Increases in 2019

Related News

Good Statements Get Good Loans
December 12, 2018
Good Statements Get Good Loans
No Comments
October 9, 2018
The IRS Looks Into Executive Compliance
No Comments
November 14, 2018
Beware the Taxes of Self-Employment
No Comments

Vernon Howard

View all posts

Recent Posts

  • 2022 Year-End Tax Planning For Individuals
  • 2022 Year-End Tax Planning for Businesses
  • MahoneySabol Receives Top Workplaces 2022 Award
  • 4 Tips for Working with a Resource-Constrained Internal Revenue Service
  • 2021 Year-End Tax Planning for Businesses

Recent Comments

    Archives

    • December 2022
    • September 2022
    • August 2022
    • December 2021
    • May 2021
    • January 2021
    • December 2020
    • November 2020
    • October 2020
    • September 2020
    • August 2020
    • July 2020
    • June 2020
    • May 2020
    • March 2020
    • February 2020
    • January 2020
    • December 2019
    • November 2019
    • July 2019
    • April 2019
    • March 2019
    • December 2018
    • November 2018
    • October 2018
    • July 2018
    • April 2018

    Categories

    • Blog / Articles
    • Press and Media

    Meta

    • Log in
    • Entries feed
    • Comments feed
    • WordPress.org

    TALK TO US

    CONTACT US TODAY


    Glastonbury
    180 Glastonbury Boulevard,
    Suite 400
    Glastonbury, CT 06033-4439
    860.541.2000
    860.541.2001

    Essex
    80 Plains Road
    PO Box 934
    Essex, CT 06426
    860.767.9999
    860.767.0353

    • About
      • News
    • Industries
      • Breweries
      • Construction and Real Estate
      • Dealerships
      • Employee Benefit Plans
      • Government
      • Hi-Tech
      • Manufacturing and Distribution
      • Not-For-Profit
      • Professional Services
      • Renewable Energy
      • Retail and E-commerce
      • Sports and Entertainment
    • Services
      • Assurance
      • Business Valuation
      • Consulting
      • Fraud and Forensics
      • International
      • Outsourced Accounting
      • SEC / PCAOB
      • Tax
      • Trusts and Estates
      • Wealth Management
    • Our People
    • Blog
    • Careers
    • Contact
    Hartford Courant Top Work Places 2022

    Privacy Policy