| A corporation is a designated entity where the | | | | by businesses that need streamlined allocation of |
| individuals related to it, and the company, have different | | | | profits and losses. This facility is not available to S |
| legal identities. The reason most companies prefer to | | | | Corporations. LLCs need to file form 100 ES and Form |
| incorporate is asset protection - incorporation protects | | | | 100. |
| your personal assets from seizure during a lawsuit. | | | | S Corporation Taxes |
| If you decide to incorporate your small business, you | | | | Since this article is primarily concerned with |
| can choose the S corporation, C corporation or LLC | | | | entrepreneurs and small businesses, it would be |
| model. Before choosing any kind of corporate model, | | | | relevant to go into the details regarding the |
| you should look at the tax rules and regulations related | | | | S-corporation. If you decide to register yourself as an |
| to a corporation. | | | | S-corporation to avail tax breaks, you need to keep in |
| Tax Laws for Various Corporations | | | | mind the eligibility conditions. Apart from the conditions |
| Tax laws vary from country to country and state to | | | | already discussed, you need to remember that you |
| state. You need to go through them before and after | | | | have to use the calendar year as the financial year of |
| incorporating. In general, all countries have mandatory | | | | the company. In addition, any shares your company |
| tax requirements from companies. Your corporation | | | | sells have to be of a single kind. |
| needs to pay taxes on the profits it earns. Even if your | | | | Advantages of Being an S Corporation |
| corporation is registered abroad, you may need to pay | | | | 1) The best thing about the S Corporation status is that |
| taxes if you reside in your home country. | | | | the shareholders shoulder the responsibility for paying |
| 1) C Corporations have to go by standard corporate | | | | the tax as their personal income tax. Therefore, the |
| tax laws. They need to pay taxes on their profits, | | | | corporation need not pay income tax twice over- first |
| subject to certain deductions depending on their | | | | as a company and secondly as individual shareholders. |
| shareholding structure. | | | | In fact, most S corporations do not pay any tax. |
| 2) S Corporations are the best option if you have a | | | | 2) It reduces the need for extensive paperwork when |
| startup company or a small business. S corporations | | | | filing tax returns or declaring income. |
| do not have to pay income tax, and get to enjoy the | | | | If you wish to incorporate your small business and |
| advantages of being a standard corporation. The | | | | need more information about tax structures of various |
| eligibility condition is that your small business should | | | | corporations, you can consult a small business advisor |
| have less than 75 shareholders who are all citizens of | | | | or tax consultant. Choose the type of incorporation |
| the US. To get the benefits associated with the | | | | carefully, as taxes will apply to your business based on |
| Subchapter S Corporation, you need to file an | | | | that. Get yourself educated on the advantages and |
| application with the tax authorities. If you want to | | | | disadvantages of each type of incorporation |
| submit taxes under LLC structure, you need to submit | | | | vis-à-vis tax laws. This will help you reap the |
| another application before the current financial | | | | benefits of a corporation without having to pay huge |
| year-ends. | | | | taxes. |
| 3) Limited Liability Partnerships, or LLC, are preferred | | | | |