Incorporate your S Corporation Online
Advantages of an S-Corporation
- Limited Liability Protection: Only the Corporation is liable for the debts and liabilities incurred by the business.
- Pass Through Taxation: The profits and losses of the business pass through to its owners, who report them on their personal tax returns.
- Transferability of ownership: Stock is freely transferable.
- Easier to raise capital: It is easier to attract capital with the sale of stocks and bonds. A corporation can have an unlimited number of investors.
- Heightened credibility: As long established business structure before the courts, S corps offer more credibility with potential customers, employees, vendors and partners because they see the owner.
starting at:$39.99*plus statefiling fees
What is an S Corporation and why would you need one?
A subchapter S Corporation, or S Corp as it is commonly known, is a legally recognized entity with the same corporate structure as a Corporation. Corporations are the most traditional types of companies and have long standing credibility before the courts.
Corporations are legal entities that exist on its own, and have the ability to provide services, sell goods, generate profits and losses. As such, Corporations bear its own fiscal and legal responsibility separate from its owners, and shield owners from direct liability from company actions, thus providing limited liability.
S Corporations have a more robust structure when compared to LLCs. S Corporations must have Shareholders known as the owners, Directors who decide and authorize the actions of the corporation, and officers such as the President who run the day to day operations of the Company. If this seems too complicated, rest at ease knowing that one person can take on all the roles. In fact, in very small S Corporations, the owner/shareholder, serves as the sole director, and president of the company.
When it comes to taxing, S Corporations, have the advantage of Pass-Through taxation. This allows the owners to claim the profits and losses of the corporation in their personal tax return. This serves a dual purpose: First, it avoids double taxation (Double taxation occurs when a company pays taxes over its profits and then the owner pays taxes over the company’s distributions in their personal return) and Second, the profits and losses of the business pass-through to its owners, who may claim profits and deduct losses on their personal tax returns which simplifies the preparation and filing of tax returns.
Unlike LLCs (info: LCC may apply to be treated as an S Corporation for purposes of taxes by electing this treatment with the IRS) S corporation only pays FICA taxes on salary compensation to its owners, and not the remaining profits paid out as nontaxable dividend distributions.
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