Many people do not know what an S-Corporation is, and how their business can take advantage of the taxes associated with such an entity. Let’s go through this sometimes elusive business entitty today on Tulsa Estate Planning Blog.
An S Corporation is defined by the Internal Revenue Service, and business entities that select this kind of organization must elect S status through the IRS. In order to claim this designation, there must be 75 or fewer shareholders.
An S Corp is like an LLC in that the shareholders are not liable for the debts of the corporation, unless in the case of fraud or mismanagement. Annual meetings, filings and reporting is required. Further, a board of directors and officers must be maintained.
As with an LLC, a state filing fee is required. Unlike an LLC, however, management cannot be determined by operating agreement. In an S Corp, the officers must manage day to day corporate activities. Directors manage the officers and the overall company. Directors are elected and are therefore managed by the shareholders.
This is the most complex entity to dissolve, so if you are wanting a corporation for a small amount of time, an S-Corp is not the best option.
If you are interested in changing your business to an S-Corp, or creating a new company with this tax scheme, then please contact the offices of Skillern Law today!