One popular type of business structure is the S-Corporation. Within this structure, business owners and shareholders can choose to opt for the S-Corporation election. Some new business owners may wonder, what is S-Corporation election? Simply put, this type of structure allows your business to be taxed as a partnership, while also benefiting from the S-Corporation setup. Here are some more things to know before choosing this type of structure.
Benefits of the Structure
The biggest benefit of this structure is a potentially lower tax rate for the company. Business owners and shareholders may pay less self employment taxes with this type of structure. Choosing an S-Corporation as your business can help you be less liable for certain situations, such as debts and lawsuits. This type of setup will also help you avoid being taxed twice. You will need an S Corp EIN number to get started on this process.
What to Do
If you want to learn more about the S-Corp election form, here’s what you need to do. First, you need to make sure your company meets the IRS requirements for this structure. The company must be a domestic company with no foreign investors. You must also have no more than 100 shareholders. You’ll need to fill out IRS Form 2553 to get the process started. The IRS expects business owners to file this form as soon as possible after the tax year has started. You’ll need important information, such as your EIN, business name, address and shareholder details.
Starting an S-Corporation or filing for a C Corp business doesn’t have to be complicated. GovDocFiling can help you make the right decisions about your business’ structure. Not only will you be able to save money on your yearly taxes, you can also enjoy additional liability benefits if you pick the right setup for your venture. Get started on the process by answering the questions about your business in this survey.