FAQ | mybookkeepersonline

Frequently Asked Questions

Limited liability. Company directors, officers, shareholders, and employees enjoy limited liability protection.
Pass-through taxation. Owners report their share of profit and loss on their individual tax returns.
Elimination of double taxation of income. Income is not taxed twice – once as corporate income and again as dividend income.
Investment opportunities. The company can attract investors through the sale of shares of stock.
Perpetual existence. The business continues to exist even if the owner leaves or dies.
Once-a-year tax filing requirement. Versus c corps, which must file quarterly.

Compare LLCs and corporations with our Business Comparison Chart.

Here's a few things to consider before adding the 's' to your corp.

U.S. citizens and permanent residents only. Unlike the c corp and LLC (Limited Liability Company), you have to be a legal resident of the U.S.
Limited ownership. An s corp may not have more than 100 shareholders.
Formation and ongoing expenses. It is necessary to first incorporate the business by filing Articles of Incorporation with your desired state of incorporation, obtain a registered agent for your company, and pay the appropriate fees. Many states also impose ongoing fees, such as annual report and/or franchise tax fees.
Tax qualification obligations. Mistakes regarding the various filing requirements can accidentally result in the termination of s corp status.
Closer IRS scrutiny. Payments to employees and shareholders could be distributed as either salaries or dividends. Each are taxed differently, which is what leads the IRS to scrutinize that distribution more closely.

Choose a legal name and reserve it, if the Secretary of State in your state does that sort of thing (not all do).
Draft and file your Articles of Incorporation with your Secretary of State.
Issue stock certificates to the initial shareholders.
Apply for a business license and other certificates specific to your industry.
File Form SS-4 or apply online at the Internal Revenue Service website to obtain an Employer Identification Number (EIN).
Apply for any other ID numbers required by state and local government agencies. Requirements vary from one jurisdiction to another, but generally your business most likely will be required to pay unemployment, disability, and other payroll taxes – you will need tax ID numbers for those accounts in addition to your EIN.
File the IRS form 2553 within 75 days of your corporation formation.