File for S-Corp Status

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What is An S-Corp?

A corporation that is structured as an S corp is subject to taxes as though it were a singleperson venture (sole proprietorship) or a partnership that has 2 or more shareholders. Rather than the company itself being taxed, the profits are dispersed to the shareholders who include them on their individual tax returns. However, not all business entities are eligible to become an S corp, such as those with more than one hundred shareholders or those that have publicly traded shares.<br>

What is an S corp election?

 You must elect to file your business as an S-corp otherwise it will automatically be classisfied as a C-corp. 

Filing for S-Corp Status

S-Corporation Election

An S corp election can be submitted by filing Form 2553 within two months and 15 days from the start of the corporation's fiscal year aka tax year.
 
According to the instructions of Form 2553, “the 2-month period begins on the day of the month the tax year begins and ends with the close of the day before the numerically corresponding day of the second calendar month following that month. If there is no corresponding day, use the close of the last day of the calendar month."
 
If a C corp desires to switch to an S corp for the upcoming tax year, they may also submit the form at any point in the current tax year.

S Corporation vs C Corporation

S CORPORATION

Taxes on Profits Only

Taxes related to profits are only paid by shareholders. Instead of having the income taxed twice, at the corporate and shareholder levels, it is sent directly to the owners, thus avoiding taxation twice.

Shareholder Maximum

There is a limit of 100 shareholders for the company, all of whom must be U.S. citizens or residents.

Common Stock

S corporation owners are limited to receiving common stock, which provides them with voting privileges.

C CORPORATION

Taxes on Profits and Income

Double taxation occurs when the same income is taxed twice, such as when a business pays taxes on its profits and then the shareholders who receive these profits are also taxed on the same income.This occurs in all C corporations.

No Shareholder Maximum

There is no restriction on the number of people who can own shares or the amount of shares they can possess.

Preferred Stock

Owners may opt to receive preferred shares, which provide them with preferential treatment in terms of dividends but no voting power.

Filthy Rich Idea's S-Corp Election Package

Filthy Rich Idea‘s SCorp Election Package has everything you need to transition your business from CCorp to SCorp. Our team of professionals can be sure that you’re taking all the necessary steps to make the switch and that you’re in compliance with all relevant laws.

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