Perhaps one of the biggest decisions to be made when forming your business is that between election of S Corp or C Corp tax treatment. Under a corporation’s bylaws, C Corp tax designation is the default. An S Corp election requires the filing of IRS Form 2553 and an amending of those bylaws, or a specific statement of election to S Corp tax status designation.
Some general considerations as to which tax treatment is preferable include:
⋅the standard double taxation at the corporate and personal income level for C Corp taxation;
⋅personal income only for the S Corp taxation designation;
⋅the participation of corporate or international shareholders;
⋅multiple classes of stock; and
⋅outside private equity funding.
Consideration of these factors can turn a common question into a complex decision involving follow-up questions and discussions about your long-term corporate goals, personal income history, shareholder composition, and corporate formalities. Rather than simply guessing as to what might be best, we have developed a questionnaire that considers these disparate data points. We can help craft a long-term plan based on the realities of your operations, rather than a default assumption by your lawyer or CPA.
Disclaimer: The information and material on this website is general information about our practice and firm. This information does not offer specific legal advice and the use of this information does not create an attorney-client relationship with RR&A or any of its attorneys. The information on this website should not be used for legal advice, and persons should not act upon the information on this website without engaging professional legal counsel.