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The S Corporation is the corporate effort to provide an entity that meets the needs of a small number of owners who want partnership tax treatment and liability protection. The S Corporation can be a single-owner entity.
The IRS has set out formation and ownership issues with a few of them listed below:
- An election to be treated like an S corporation must be timely made;
- Must be a domestic corporation;
- No more than 100 shareholders;
- No non-resident alien shareholders;
- One class of stock;
- Tax year ending December 31 or a natural business year;
- A 52-53 week tax year ending with reference to #6 above requirements.
- Income of the S corporation is GENERALLY taxed to the shareholders rather than to the corporation (flow thru).
This list is not all inclusive and you are encouraged to check with your financial advisor or legal counsel to insure that the S corporation is appropriate for your business needs.
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By: Michael Schiller