| Some corporations may elect to be treated as S | | | | S corporation. If an LLC meets the other requirements |
| corporations. This election affects the corporation's | | | | to qualify as an S corporation, the LLC also files a |
| federal taxation. In its website, the IRS states: "Electing | | | | Form 2553. |
| to be treated as an S corporation allows income to | | | | The signature line of Form 2553 must be signed and |
| flow through the corporation without being taxed until it | | | | dated by the president, vice president, treasurer, |
| is claimed as income by the shareholders. This avoids | | | | assistance treasurer, chief accounting officer, or any |
| double taxation of corporate income." | | | | other corporate officer authorized to sign. In addition on |
| In order to qualify as an S corporation, you must make | | | | the Form 2553, there is a signature line for the |
| a timely and accurate filing of Form 2553, Election by a | | | | Shareholders' Consent Statement. All shareholders |
| Small Business Corporation. According to IRS, the | | | | who own stock on the day the election is made must |
| corporation must make its S election within the first | | | | consent to the election, and they must all sign and date |
| two and one-half months of the corporation's taxable | | | | the Consent Statement. |
| year, or, at any time during the preceding taxable year. | | | | According to an article published by the IRS, S |
| If the S election is made after the first two and | | | | corporations are the most prevalent type of |
| one-half months of a corporation's taxable year, then | | | | corporations. S corporations represent approximately |
| that corporation will not be treated as an S corporation | | | | 60% of all corporations. The total number of returns |
| until the next taxable year. | | | | filed by S corporations has increased every year since |
| The IRS rules state that a corporation's taxable year | | | | 1997. S corporations became the most common |
| generally begins on the earlier of: | | | | corporate entity type in 1997. |
| 1. the date the corporation had shareholders; | | | | Jo Ann Joy, CEO Phone (602) 663-7007 |
| 2. the date the corporation acquired assets; or | | | | The future of your business starts here. |
| 3. the date the corporation began doing business. | | | | For more information about these and other important |
| The IRS also states that a limited liability company | | | | business topics and for legal consultation, please visit |
| (LLC) that is eligible to be treated as a corporation | | | | our website at |
| may be classified as an S corporation, provided that | | | | Copyright 2006. Indigo Business Solutions is a |
| the entity meets all other requirements to qualify as an | | | | registered trade name. |