S Corporation

It’s not how much you make, it’s how much you keep. – Robert Kiyosaki


This is a type of corporation which is formed through the election of the IRS tax. The IRS defines the S corporation as a company which has a separate legal entity, apart from its owners. Financial liability of the owners is limited in this type of business entity.
The S corporation is different from a C corporation as the losses and profits can be passed through to the personal tax return. The shareholders are taxed and the owners are not.


The advantages and benefits of choosing an S Corporation for your business are:

All shareholders, owners, officers, company directors etc. have limited liability protection.
Besides an express personal guarantee, the shareholders are not responsible for the liabilities and debts of the corporation.
  • The company is allowed to attract any investors through share sales.
  • Income evades double taxation, as dividend and corporate income.
  • All company owners just report their losses and profits on the individual tax returns.
  • Businesses can enjoy a perpetual existence even if the owner dies or leaves the company.
  • The business is only required to file for taxes on an annual basis.
  • It is not an obligation for a corporation owner to be a U.S. citizen or permanent resident.
  • S corporations do not pay any taxes at the corporate level. Any loss on the business level is passed through to the shareholders, and reported duly on their income tax returns. This way, the business losses help offset income on the tax return of the shareholder.
  • A reasonable allocation and characterization of the salary and dividend distribution, helps the owner or operator reduce the burden of self employment tax liability, while business expenses are generated and wages are deducted from the company.
  • Ownership interest in an S corporation can be easily transferred without the risk of triggering off any unpleasant tax consequences. No adjustments need to be made on property basis, and there is no need for compliance with any complicated accounting rules with the transfer of ownership in an S corporation.
Write a comment:


Your email address will not be published.

© 2017 Honest Accounting Group, LLC | You Run Your Business, We Will Do The Bookkeeping!