Why You Should Form an S-Corporation
If you're thinking about starting a business, you've probably considered forming some type of corporation. Corporations offer a number of benefits, including limited liability, centralized management, and continuity of life. However, corporations also have some drawbacks, such as double taxation and complex compliance requirement.
If you're looking for a business structure that offers the benefits of a corporation without the drawbacks, you may want to consider forming an S-corporation. S-corporations are a particular type of corporation that has elected to be taxed as a pass-through entity. This means that the profits and losses of the S-corporation are passed through to the shareholders, who report them on their personal tax returns. This can save businesses money on taxes, because they don't have to pay corporate taxes on their profits.
In addition to pass-through taxation, S-corporations also offer a number of other benefits, including:
Limited liability: S-corporation shareholders are not personally liable for the debts and liabilities of the business. (This is known as the corporate veil).
Centralized management: S-corporations can be managed by a board of directors or by a single shareholder.
Continuity of life: S-corporations continue to exist even if one or more of the shareholders die or withdraw from the business.
If you're thinking about starting a business, consider forming an S-corp. S-corporations offer a number of benefits that can help you protect your personal assets, save money on taxes, and have more flexibility in managing your business.
Here are some additional benefits of forming an S-corporation:
Flexibility in raising capital. S-corporations can raise capital from a variety of sources, including debt, equity, and venture capital.
Ease of transferability of ownership interests. It is relatively easy to transfer ownership interests in an S-corporation.
Simple formation and operation. The formation and operation of an S-corporation is relatively simple and straightforward.
Interesting Limitations:
Be a domestic corporation
Have only allowable shareholders (individuals, certain trusts, and estates; but not partnerships, corporations or non-resident aliens)
Have no more than 100 shareholders
Have only one class of stock
If you're ready to form an S-corporation, work with the Oozoonian Law Corporation to choose the right structure for your business and ensure that your S-corporation is properly formed and operated.
Comments