S Corporation – What Is It?
By: SD Lawyer
For many small businesses, the ,S, corporation is the business entity of choice. The ,S, in S corporation refers to a tax designation. All corporations are created the same way under state law. A small business must then chose a tax status, to wit, ,C,, ,S, or non-profit. Important issues concerning S corporations are covered in this article.
C Corporation v. S Corporation
Federal tax laws automatically consider every corporation to be a ,C, designation. A small business, however, may elect to be designated as an ,S, corporation by filing IRS form 2553. The election must be made prior to the tax year in which it is going to be effective. All shareholders must sign the election.
A C corporation stands alone fo...
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