| The primary advantages S corporations have over | | | | subject to similar rules as those with a sole |
| regular corporations are tax-related. Owners of S | | | | proprietorship or partnership type of business. Since |
| corporations are not subjected to the double taxation | | | | money obtained from S corporations are not |
| all C corporations face. Profits can be passed through | | | | considered wages, they are not subject to |
| the owners' individual income tax, while the corporation | | | | self-employment tax. |
| itself is not taxed. | | | | When starting a business, it may be undesirable to |
| The main advantages corporations have over sole | | | | offer fringe benefits to employees, because it may not |
| propriety businesses are their limited personal liability. S | | | | be affordable. S corporations are given favorable |
| corporations can have this same protection but not | | | | treatment over non-corporations due to their ability to |
| subject themselves to corporate taxation. | | | | deduct expenses such as this from their taxes. While |
| Being able to easily raise funds is also another | | | | sole proprietorships can only deduct 30% of benefits, |
| advantage corporations have over sole proprietorships. | | | | such as medical insurance, S corporations are allowed |
| However, since a corporation is considered its own | | | | to deduct 100% of the cost. |
| entity, the profits of a corporation are taxed, and the | | | | When looking into what type of entity your business |
| shareholders are taxed again for the same income. In | | | | should be, you should balance the legal protection, as |
| an S corporation, shareholders directly file the income | | | | well as the tax saving you will receive. There is no |
| as individual income, while the corporation itself is not | | | | perfect form, but some will offer you more |
| taxed. | | | | advantages over the other. Contacting a tax lawyer is |
| Another advantage S corporations have is they can | | | | the best way to figure out what is best for your |
| declare interest paid for S corporation stocks as an | | | | situation. |
| investment interest expense. S corporations are | | | | |