S Corporations: Incorporating a Small Business

An S Corporation is a separate legal entity just like a regular C Corporation. It is a structure that may be used for incorporating a small business. It has its own charter and goals for being profitable. The owners in this type of structure have limited liability for debts and lawsuits. The S Corporation is not liable for federal income taxes, nor for state taxes in the majority of states, other than for certain capital gains and passive income. The profits/losses are “passed through” to the shareholders (owners) and are reported on their individual tax returns, avoiding “double” taxation. For help with questions about S corporations or incorporating a small business, please contact us.