S Corporations are not treated as separate taxable entities like C Corporations.
(The "S" is for Chapter S of the IRS code.)
No corporate income tax is paid to the IRS for S Corporations.
For tax purposes net income is "passed through" the S Corporation to the personal income tax of the shareholders and paid at the
appropriate personal income tax rate.
With an S-Corporation double taxation (paying both corporate and personal income taxes) can be avoided while retaining all the legal
protections of a C Corporation.
As in a C Corporation shareholders of corporate stock are the owners of the S Corporation.
Federal law alows a nontaxable Employee Stock Ownership Plan to hold stock in an S Corporation.
This gives shareholders a way to defer some of their taxes.
No tax is paid on these stocks until they are withdrawn from the Plan.
All Corporations start out as C Corporations.
In order to be treated as an S Corporation a form must be filed with the Federal government within 90 days of incorporation of the C Corporation.
An S-Corporation has some limits on ownership.
It may be a better choice if you know that your Corporation will always be small and be owned by a small group of people.
S Corporation constraints include:
No more than 100 shareholders
All shareholders must be either US citizens or resident aliens, certain trusts, estates or organizations
Shareholders may not be partnerships, Corporations or non-resident aliens
Only common (not preferred) stock may be issued
S Corporations are required to hold director and shareholder meetings just like C Corporations.
How do I form an S-Corporation
PCF can help you form an S Corporation when ordering your Corporation services.
If you have an existing C Corporation and would like to convert it to an S Corporation,
use the order form below. The fee for our S Corporation Election services is $30.00
If you are ready to form an S Corporation Online now simply fill in the form below and press Place Order
If you have any questions call us toll free at 855-771-2477