Introduction To S Corporations - What You Need To Know About It

Speaking of S Corporation, this is a term that is commonly used to pertain to a corporation that has been elected to be taxed as a flow-through entity, the same with LLC or Limited Partnership. For those of you who may be wondering what the S in the S corporation might mean, well, that refers to an IRS code section. The S election is a type of taxation or IRS code section wherein the shareholders are allowed to be taxed only at the individual level instead of being taxed at the individual and corporate level, thus avoiding double taxation such as that of C Corporation. And also, we want you to know that there is no federal income tax levied at the corporate level, different from the C Corporation since it is taxed at both the corporate level as well as the individual level, earning the description of double taxation. As a matter of fact, there are many businesses out there that favored S Corporation over C Corporation for the very reason that the former only has single taxation and limited liability protection, something that is beneficial for those who have charging order protection extended to corporate shares.

The next thing that we want you to know about S Corporation is that it has specific restrictions when it comes to ownership. Among the restrictions that S Corporation has when it comes to ownership has something to do with the number of owners being one hundred or fewer and all of them must be their living trusts or individuals. Some of the entities that are not allowed to get S Corporation are corporations, multi-member LLC and also, non-US residents. If these restrictions are not followed, the IRS will decide the corporation to be C Corporation and double tax them accordingly.

There are so many good things that come from choosing S Corporation like the following: unlimited number of management, no state residency requirements, limited liability for management and shareholders and great income-splitting for potential owner/employees. Other than that, we want you to know as well that when you choose S Corporation, you will get a distinct and court-recognized existence which will help in protecting your business from personal liability which can cause you to lose your wealth in assets such as your home, your car or even your nest egg. Be sure to see more here!

Not only that, we want you to know that being an S Corporation owner will allow you to enjoy flow-through taxation wherein profits are distributed evenly to shareholders who are taxed on profits at their level. Be sure to discover more here!

By becoming an S Corporation owner, you will be able to enjoy proper privacy protection. By becoming an owner of S Corporation, you can not only take pay income taxes and regular payroll deductions, but you can also take a smaller salary while having the rest of the profit a subject of distribution for income tax only. Learn more about business at https://www.huffingtonpost.com/topic/small-business-marketing.