Q. With respect to commerce business for sale, what is the S corporation?
An S Corporation is initially formed in the same manner as a C Corporation, by filing incorporation documents with the state of incorporation. Once the business has incorporated, the owners may decide to file as an S Corporation, within approximately 75 days of incorporating. To do so, they need to file an IRS Form 2553. This does not create a separate type of corporation, but does change the corporation's tax structure. The S Corporation has shareholders and is taxed like a sole proprietorship or a partnership rather than like a C Corporation, which is taxed as a separate business entity. Income is passed through to the shareholders, who report their pro rata income, or losses, on their individual tax returns. The S Corporation shows profits and losses as they pass through to the shareholders, and the corporation does not pay federal income tax as a separate entity. For further details, please contact WSI. -
Elizabeth Miranda
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