What is a S Corporation
What is a S Corporation?

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What is a S Corporation?

An S Corporation is a small business Corporation whose shareholders have made a choice to be taxed under personal income tax law rather than Corporation law.

An S Corporation is not treated as a separate taxable entitiy like a C Corporation. The S is for Chapter S of the IRS code.

No Corporate income tax is paid to the IRS for an S Corporation. For tax purposes net income is "passed through" the S Corporation to the personal income tax of the shareholders. With an S Corporation double taxation (paying both corporate and personal taxes) can be avoided while retaining all the legal protections of a C Corporation.

In addition, federal law allows 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 No tax is paid on these stocks until they are withdrawn from the Plan.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 a C Corporation. In order to be treated as an S Corporation a form must be filed with the Federal government within 75 days of incorporation of the C Corporation, or within 75 days of a new year.

S Corporation eligibility requirements include:
  • Less than 75 shareholders
  • All shareholders must be either US citizens or resident aliens, certain trusts, estates or organizations
  • Business entities and non-resident aliens may not be shareholders
  • Only common (not preferred) stock may be issued
  • The end of the fiscal year must be Dec. 31 S
An S Corporation is required to hold corporate and shareholder meetings just like a C Corporation. An S Corporation is required to pay taxes only once a year (vs. quarterly for a C Corporation).

45 states accept a Federal S Corporation election if the Corporation has filed a valid IRS S Corporation Election form. In Arkansas, New Jersey, New York, Ohio, and Wisconsin, a separate state S Corporation election must be made.
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Administrative Dissolution
Agent for Service of Process
Apostille
Apportionment
Articles of Incorporation
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Assumed Name
At Will LLC
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B Corporation
Benefit Corporation
Board of Directors
Business Dissolution
Business Entity
Bylaws
Certificate of Existence
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Certified Copy
Close Corporation
Common Stock
Conversion
Corporate Bylaws
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DBA
Disregarded Entity
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ESOP
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Good Standing Certificate
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IRS Form 966
ITIN
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LLC
LP
Majority Shareholder
Meetings
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Nexus
Non-Stock Corporation
Nonprofit Corporation
Obligated Member LLC
Organizer
Paid-in Capital
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Personal Service Corporation
Preferred Stock
Privilege Tax
Professional Corporation
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Reporting Requirements
Revocation
S Corporation
Series LLC
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Stock Certificate
Term LLC
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