Some time ago I start writing a series of columns discussing potenl pos by various business structures.  “Avoiding the Hobby Tax Trap” present the danger, consequences, and how to avoid having a business reclassifi as a hobby by the IRS.  “Business Owners: Lower your R (Audit) Flags” warn sole proprietors of three audit triggers commonly found on their s.  One most recent column, “Home Office Duction Danger” discuss the (often overlook) requirements for claiming the Home Office duction. For those interest, these articles are available at both and

Today I will begin a discussion on S-Corporations.  The basics and their potenl benefits for owners.  But first a word of : Business structures are highly complex.  Any single article (or series of articles) will barely scratch the surface.  The tax benefits provid by a particular business structure at one end of the business life-cycle can quickly become a major tax-headache at the other.  Before choosing a particular structure, research your options and obtain professional assistance from both an attorney and tax professional. Then, make this important decision yourself.  It is, after all, your business.

: S-Corporations are “elect” business structures for tax purposes.  One does not file with the Secretary of State to become an S-Corporation.  Instead, an eligible domestic (US bas) corporation of other eligible entity (for example an LLC) files Form 553 to elect to be as a S-Corporation for tax purposes. 

An S-corporation can have up to 100 eligible “shareholders.”  Generally, only US citizens or resident aliens, estates, and certain trusts and estates can be shareholders.  S-Corporations are also only allow to have one class of .

Potenl Benefits:  There are several benefits S-Corporations can provide to owners.  A few are list below.

Today’s column has discuss the potenl benefits of S corporations.  Later columns will visit the y tax-challenges that accompany these benefits.  As always, this article or any article does not constitute tax advice.  If you would like to speak with a tax professional, please feel free to contact our office to make an appointment.


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16 thoughts on “S-Corporation: The Good, the Bad, the Scary (Part 1)”

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