Tampa Tax Attorneys Assisting With S Corporation Elections In Sarasota, St. Petersburg, Clearwater and All of Florida

“S corporations” are entities (corporations, LLC’s, etc) organized for federal income tax purposes that make a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code – Subchapter S, hence S corporation. Broadly speaking, S corporations do not pay any federal income taxes, and instead the corporation’s income or losses are divided among and passed through to its shareholders, who then report the income or loss on their own individual income tax returns. The perceived advantage to S corporations is that they allow for single taxation, whereas a traditional corporation would require double taxation, meaning both the company’s profits and the shareholders’ dividends will be taxed.

S corporations are most often small, closely-held corporations that are not taxed directly. Income is typically subject to tax at the owner level only, similar to partnerships. Owners of S corporations report their pro-rata shares of income or loss on their own tax returns. While there are considerable benefits to S corporations for some businesses, they do face certain restrictions, including limitations on the number and type of shareholders, limitations on the classes of stock permitted, and prohibition of foreign or corporate ownership. More specifically, the basic requirements for forming an S corporation are:

• The business is a domestic corporation
• The business has only allowable shareholders, including individuals, certain trust, and estates, and not including partnerships, corporations, or non-resident alien shareholders
• The business does not have more than 100 shareholders
• The business has one class of stock
• The business is not an ineligible corporation such as a certain financial institution, an insurance company, or a domestic international sales corporation

To become an S corporation, the corporation must submit Form 2553 Election by a Small Business Corporation, signed by all shareholders.

Businesses interested in exploring the benefits and possibilities of S corporation election are encouraged to contact the knowledgeable tax attorneys at Yesner and Boss, P.L. for a consultation. Serving Tampa, St. Petersburg, Sarasota, Clearwater, New Tampa, and areas throughout Florida, Yesner and Boss is committed to providing their clients the best possible counsel on business formation and structuring issues.