In evaluating which form of corporation you want for your new business entity, an S Corporation has a number of benefits.  S Corporations cannot be more than 75 shareholders, though husband and wife, estates, certain trusts, tax-exempt charitable institutions, certain partnerships and other S corporations with a sole shareholder count as one shareholder.

The key benefits of an S Corporation are tax savings and liability protection. There is no double taxation because income and losses are passed through to shareholders and included on their individual tax returns.  In addition, if the corporation choosed to retain some of the income, the portion retained is not subject to Medicare tax.

Before an individual shareholder in an S Corporation is personally liable, the person or entity suing must piece its corporate veil, which is quite difficult.  However, there are special rules for professionals such as attorneys and accountants that limit the protection of a S Corporation.  Even in the latter case, the S Corporation provide a layer of liability protection to the individual shareholders.

Lastly, many shareholders enjoy the S Corporation benefit of receiving pay checks and a W2.

Call us with more questions at 732-438-3880 or visit our web site at www.strichlaw.com.

Gabrielle L. Strich, Esq.

FEDERAL TAX NOTICE - IRS rules mandate restrictions on federal tax advice by attorneys and accountants. If this correspondence or any attachments contain (or may be construed to contain) any federal tax advice, such advice is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer under federal tax laws.

Strich Law Firm, P.C.’s employees are not accountants. As such, tax information may not be relied upon for federal, state or other tax purposes. Rather, you should consult with an accountant for any tax advice.

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