S Corp vs. C Corp Tax Election Topics

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

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