Consider S Corporation Election

Consider the tax advantages that S corporations could bring to your small business.

S corporation’s are defined as a regular corporations that rather than being taxed at the corporate level, have opted to have all income or loss passed down to the personal tax returns of its shareholders. S corporations have the tax characteristics of a partnership, but also provide the legal liability protection of a corporation. 

Shareholder-employees are compensated more flexibly through the S corporations. To avoid problems, understand the requirements, because certain rules govern how far you can go with the different strategies. Charitable deductions are not limited to 10% of income as with regular corporations giving S corporations another advantage. Company losses can be deducted by S corporation shareholders against other personal incom.

The downside of S corporations is that they are limited to one class of stock and 100 shareholders. Shareholders can not be partnerships, corporations, or nonresident foreigners. The range of tax-deductible fringe benefits available to employees is narrower when operating an S corporation.

If considering an S corporation, corporations with a calendar year end have until March 15, 2014 to file with the IRS for the current tax year. New corporations have until the third month  after incorporation on the 15th day to make the election.

Contact us today at 706.353.1711 to discuss any questions you may have about S corporations.