For those who wish to start a business correctly and legally, one entity type that’s very popular and worth considering is an S Corporation or S Corp. But what does this mean exactly? And what benefits are unique to this entity type?
These are common questions our team at Christman | Daniell Attorneys, fields all the time from our business clients. So let’s explore.
What Is an S Corporation?
An S Corporation, named for Subchapter S of Chapter 1 in the Internal Revenue Code, is a business structure that allows your company to become a “pass-through entity” where all income, losses, deductions, and credits pass directly to shareholders. S Corp shareholders pay taxes on their distribution as personal income, and the corporation is not subject to taxation except for employee payroll taxes and other fees, depending on the state where the business is incorporated.
As stated earlier, there are many benefits to establishing your new company as an S Corporation.
- Individual shareholders benefit from limited liability protection.
- S Corps make it easier for shareholders to be company employees, earn salaries, and receive corporate dividends. This benefit can help corporations keep good people by offering them ownership opportunities.
- There is a certain status that comes with being incorporated. The status also extends to credibility for the shareholder/employee, existing and future clients, suppliers, etc.
- Tax-favorable characterization of income.
- Pass-through taxation.
Christman | Daniell Attorneys has helped hundreds of companies meet their business goals. When we sit down to talk about business formation, we will discuss your short-term and long-term goals. Every successful business venture comes down to asking one important question: What do you want to accomplish? We work to protect you and your interests every step of the way. We truly understand that there is no one-size-fits-all solution to forming a business. That’s why we will customize solutions to meet your exact needs.
Please call Christman | Daniell Attorneys, for your legal needs today!
Please consult an attorney for advice about your individual situation. The material on this website and in this or any blog article we publish are for informational purposes only and do not constitute legal advice. The attorneys at Christman | Daniell Attorneys, believe in tailoring legal advice and solutions to your own personal circumstances.
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