Many sole proprietorship and partnerships have seen that there are many businesses incorporating their company to S Corporation. What is with this corporation? It gives them the curiosity about the effect of it in their business. From the Internal Revenue Service or IRS, it is treated as a pass-through business entity because of the way to incorporate your business. You need to file the Article of Incorporation to any government body which has the level of State Secretary. There are many companies saying that it’s their advantage of being a member of S Corporation. But as a shareholder, you need to know what you can get with this business entity and how it affects your business. Blog post like this will educate you.
- It protects your personal assets. The S Corporation aims to separate and protect your personal assets from the corporation. The creditors are not allowed to touch any of your personal assets such as house, car or bank accounts to satisfy the debts and liabilities of the company.
- Easy transfer of ownership. Shareholder can transfer ownership without having difficulty with the process and problems with the tax. It does not require making some adjustment and passing hard accounting details to the corporation just to make the transfer.
- Adds credibility to new business. It gives the new business the credibility to have easy access to other investors and help when it comes to bank loans.
- Not so flexible. The corporation does not have the allocation for income and loss to the shareholders because of the restriction called one-class-of-stock.
- Expenses when forming and ongoing process. When you are incorporation and processing your company, you will have to go through paying fees. It is a little expensive when you compare to partnerships and sole proprietary.
You have now the idea of S Corporation but you need to know more about them. This site here may help, just click.