Advantages of S Corporation Status
S Corporations are a unique type of business structure about which many people may not be aware. They are similar to traditional corporations, also known as C Corps, but also share similarities with partnerships and LLCs. This hybrid structure can make them the ideal entity for some businesses.
If you are starting a new business and are weighing your options for the type of business entity to choose, we can help. Contact the Texas business formation professionals of Texas Legal Entities today by calling 512-472-2431.
Benefits of Forming an S Corp
Corporations that select “S Corporation” tax status are treated differently by the IRS than other corporations when it comes to taxation. S corporations enjoy “pass through” taxation, meaning that the corporation itself is not taxed. Only the earnings of owners are taxed, meaning that the business is not exposed to double taxation the way that many corporations are.
Other benefits of selecting S Corporation status include:
- Limited liability for owners
- Ability to pay income taxes as an LLC or partnership
- If you sell the business, your taxable gain is less than it would be as a C Corporation
- Corporate penalty taxes do not apply
If you are interested in having the benefits of a corporation for your business without the disadvantage of double taxation, S Corporation status may be the ideal option for you. However, there are strict rules for qualifying as an S Corp, so it is important to discuss your options and eligibility with a professional before committing to a business structure.
Contact Us
To learn more about S Corporations and other business structures available to you, contact the Texas business formation experts of Texas Legal Entities today at 512-472-2431.
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