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Gov Doc Filing Busts 4 S-Corporation Misconceptions

ispoz July 5, 2018
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As a new business owner, you have likely heard information regarding S-Corporations and what it can provide for your business. While much of the information you received is true, some of it is misconceptions. Continue reading to learn the truth about 4 S-Corporation misconceptions and then visit https://www.govdocfiling.com/ to apply for an Employer Identification Number (EIN) online.

  1. S-Corps Are Formed in the Same Way as Corporations

 Even though an S-Corp is a type of corporation, they are formed differently than corporations. First, the corporation must be formed, and then the corporation elects the Sub- S tax status. To make this election, Form 2553 must be filed with the IRS.

  1. For Tax Purposes an S-Corp and LLC Works in the Same Way

LLCs and S-Corps are similar in how they minimize liability and in the way taxes are paid. Their structure is also alike. However, S-Corps pay income tax through the shareholders (owners) of the business, while corporation pays income tax the net income of the actual business.

  1. All Small Businesses are Eligible to Form an S-Corp

Corporations that wish to file for S-Corp election must meet specific requirements and limitations. A corporation must have no more than 100 shareholders and must be a domestic corporation, cannot be one of many ineligible corporations, and can have only one type of stock. Check with a tax attorney to learn about other requirements as well.

  1. S-Corporation Election Can Occur Any Time After the Formation of the Corporation

As required by the IRS, Sub-chapter S Election must be filed no more than 2 months and 15 days after the start of the tax year in which the election is to take effect. The first year of business for startups.

As a new business owner, you may be required to apply for a Tax ID Number. Gov Doc Filing provides a Tax ID application online to take the hassle out of applying available 24/7/365.

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