Independent legal and tax
structures are separated from
their owners.
Your personal assets are separate
from your business debts.
All profits and losses from the
company are reported on the
owner’s personal tax returns.
The shareholders are limited on
the number of share and they
must be a U.S Citizen or
residents.
S Corp must hold annual
meetings and record meeting
minutes.
Advantages of S Corp
There are Limited liability
among the directors, officers,
shareholders, and employees
S corp are not double tax which
means income is not taxed twice
Investment opportunities. The
company can attract investors
through the sale of shares of
stock.
The business continues to exist
even if the owner leaves or dies.
Taxes are only required once a
year.
Disadvantages of S Corp
Must be U.S. citizens and
permanent residents only.
S Corp cannot have no more than
100 shareholders
You must first incorporate the
business by filing Articles of
Incorporation with your desired
state.
Many states also impose ongoing
fees, such as annual report and/or
franchise tax fees.
Tax qualification obligations.
Mistakes regarding the various
filing requirements can
accidentally result in the
termination of s corp status.
Both employees and
shareholder’s payments can be
distributed as salaries or
dividends which can also be
taxed differently, which is what
leads the IRS to scrutinize that
distribution more closely.