If you are a small business looking to file for an S-Corp, watch out if you plan to incorporate in: Arkansas, New Jersey, New York, Ohio or Wisconsin. What is the reason for the warning? These five states have chosen to force businesses to file additional documentation in order to fully incorporate their business. And it is for corporate hurdles like this that Vcorp Services partners with small businesses.
Why incorporate into an S-Corp? S corporations are treated as corporations under state law. They are recognized as separate legal entities and generally provide shareholders with the same liability protection afforded by large enterprises. For Federal income tax purposes, however, taxation of S corporations resembles that of partnerships. As with partnerships, the income, deductions, and tax credits of an S corporation flow through to shareholders annually, regardless of whether distributions are made. Thus, income is taxed at the shareholder level and not at the corporate level. Payments to S shareholders by the corporation are distributed tax-free to the extent that the distributed earnings were previously taxed. Also, certain corporate penalty taxes (e.g., accumulated earnings tax, personal holding company tax) and the alternative minimum tax do not apply to an S corporation.
If you are looking to protect yourself and your family, incorporating your business is a vital decision. Contact us directly, we promise it will be easy and cost-effective.
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November 19th, 2008 at 10:56 am
[...] S-Corp State Issues [...]