Create Your S-Corp With Confidence

An S-Corporation is not a business structure or separate legal entity like a corporation or LLC. Rather, it’s a tax classification that either an LLC or a corporation can apply for with the Internal Revenue Service (IRS) if it meets the criteria.

For an LLC, filing as an S-Corporation may provide savings on self-employment taxes in some cases. For C- Corporations, it can be a way to avoid double taxation.

To qualify for S-Corporation status, a business must meet the following requirements:

• Be a domestic corporation or LLC
• Have only allowable shareholders
• Have no more than 100 shareholders
• Have only one class of stock
• Not be an ineligible corporation

In order to get S-Corporation status, you must first become an LLC or a corporation, both of which provide limited liability protection.

S-Corporation advantages include:

1. Protection of personal assets
2. Pass-through taxation (avoid double taxation)
3. Lower self-employment tax (FICA payrolls withhold tax)
4. Perpetual existence
5. Flexible accounting methods
6. Ease of ownership transfer
7. Enhanced credibility

S-Corp status may not be right for all businesses. If you’re not sure whether to identify your LLC as an S- Corp or keep the default status, be sure to consult with an experienced business law attorney or accountant in your state.

A C-Corporation is the default form of corporation and a separate legal business entity. An S-Corporation is just a tax election that can be made by either a Corporation or an LLC.

Yes, your company will still remain an LLC business structure, but it can be taxed as an S-Corp. To request that the IRS taxes your LLC income as an S-Corp, you need to complete Form 2553, Election by a Small Business Corporation, to be treated as an S corp instead of an LLC.

If your LLC is past the 75-day election deadline, you’ll also need to file Form 8832, Entity Classification Election, to elect to be taxed as a corporation. Then you would file both Form 8832 and Form 2553 together via USPS-certified mail.