Why would you choose an S corporation?
One major advantage of an S corporation is that it provides owners limited liability protection, regardless of its tax status. Limited liability protection means that the owners’ personal assets are shielded from the claims of business creditors—whether the claims arise from contracts or litigation.
What is an S Corp considered?
An S corporation, also referred to as an S–corp or S subchapter, is a tax election that lets the IRS know your business needs to be taxed as a partnership. In an S–corp, the business owners are called shareholders. As an owner, you are considered an employee of the business and must pay yourself a reasonable salary.
What is S corporation example?
Example of S Corporation Taxation
Jacks, Inc. is formed as an S corporation in the state of Florida. Robert owns 51% of the corporation, and Brenda owns 49%. In 2015, the company’s net profits totaled $20 million.