![]() An S corporation shareholder’s personal assets, such as personal bank accounts, cannot be seized to satisfy business liabilities. The owners (the shareholders) have the same protection from liability as shareholders of a C corporation. An S corporation issues stock and is governed as a corporation, with directors, officers, and shareholders who function in the same manner as their C corporation counterparts. The state corporation laws make no distinction. ![]() ![]() The difference between a C corporation and an S corporation is in how they are taxed under income tax laws. There is no requirement to notify your state of incorporation that your corporation will be an S corporation. Electing “S corp” status could lead to important tax benefits.Ī corporation is created by filing Articles of Incorporation with the Secretary of State or a similar government body. What is an S corporation (S corp)?Ī corporation is taxed for federal income tax purposes in one of two ways – as a “C corporation” or an “S corporation”.Īn S corporation is a corporation that is treated, for federal tax purposes, as a pass-through entity through an election made with the Internal Revenue Service (IRS). Many business owners assume it will be too costly or time-consuming - but neither is the case. Whether you are just starting your business, or have been operating as a sole proprietorship or general partnership, you may be wondering about the advantages of incorporating your business as an S corporation.
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