Introduction

Whether you are an established business, or are newly started—the entity that you chose will impact your reporting requirements, tax liabilities, general liabilities and a host of other factors that you may need to consider.

SMBs (Small/Medium Businesses) throughout the United States need to carefully consider whether the S-corp election is beneficial to their situation. The S-corp, or small business corporation, combines the benefits of the C-corp environment with the tax benefits of that of a partnership. What is beneficial to an S-corp is that the entity does not pay taxes and instead each shareholder will be allocated a portion of the income, deductions, credits based on the shares owned by each owner.

What is important to note is that you are limited to only 100 shareholders, under an S-corp election. Owning real estate through an S-Corp is considered a no-no because unlike a partnership where you can distribute appreciated property, distributing appreciated assets triggers a gain.