From the course: Running a Web Design Business: Defining Your Business Structure
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S corporation: Advantages and disadvantages
From the course: Running a Web Design Business: Defining Your Business Structure
S corporation: Advantages and disadvantages
In order to understand how S-Corporations work, make sure you have watched the previous video about C-Corporations. An S-Corporation is a C-Corporation that has selected to be taxed as a small business corporation, by filing the IRS Form 2553. Only domestic corporations with less than 100 shareholders qualify to be selected as S-corporations. So I sometimes think of the S as small corporation even though S actually refers to the sub-chapter S of chapter one in the internal revenue code. S-Corporations enjoy all the advantages of C-corporations, like limited liability, ease in raising capital and perpetual existence. But S corps also enjoy two bonuses called pass-through taxation and elimination of double taxation. Let's take a look at these two advantages. An S corp is not an independent tax paying entity, like a C-corp so all the profits and loses are past through the shareholders personal income tax returns. However, the S-corporation must annually file IRS form 1120S to report…
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Contents
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Understanding your business-structure options1m 8s
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Sole proprietorship: Advantages and disadvantages2m 48s
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Partnerships: Advantages and disadvantages3m 24s
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C corporation: Advantages and disadvantages4m 54s
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S corporation: Advantages and disadvantages2m 19s
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LLC: Advantages and disadvantages4m 12s
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Choosing your business structure using five key questions4m 21s
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