LYCOS RETRIEVER 
S Corporation: Subchapter S Corporation
built 283 days ago
[One] clear advantage of being a Subchapter S Corporation is that each investor is more involved with the taxation, since the profits are flowed individually. This usually leads to bigger tax savings. But in California though, there are certain things to ponder if you're deciding to register your business as a Subchapter S or a limited liability corporation. Depending on how your company declares its gross revenues, additional taxes such as franchise tax will be added on top of your net income tax.
Source:
An S Corporation is a special form of corporation (Note: The "S" in S Corporation refers to subchapter S of the tax code). S Corporations are based on C Corporations but they are not treated as a separate tax entity as C Corporations are. Instead, the income of an S Corporation is "passed through" to the personal income of its owners (shareholders) in proportion to their ownership interest.
Source:
When considering whether or not to file for Subchapter S Corporation tax status, companies should ... be aware of potential disadvantages. Because the financial power is in the hands of the shareholders, executive decisions need to be agreed upon by all. Disagreements between individual shareholders can lead to a stall in the process. Additionally, stockholder/employees must declare health insurance and other employee benefits as taxable income if they own more than a 2% share of stock. Subchapter S Corporation tax status is most beneficial to corporations with small numbers of shareholders that have a common vision for the future of the company.
Source:
If one would ask all the entrepreneurs in California if they are willing to venture as a subchapter S corporation, probably, most of them would just be uncertain in making their response. This is maybe due to their lack of proper understanding on this matter. Basically, a subchapter S corporation is a business entity that is able to meet the requisites and has undergone an election to be taxed under Subchapter S of the Internal Revenue Code. It is a mistaken belief that contracting into this type of business will just make things difficult for a company. A corporation should just be informed and have a proper background regarding this in order to recognize the benefits of such venture.
Source:
Once it incorporates, it has two choices: to be a regular C corporation by default or to elect S corporation status, a name derived from Subchapter S of the Internal Revenue Code. This status was derived in an effort to make incorporating more attractive to small businesses and allow them to enjoy some of the benefits of corporate status while avoiding some of the drawbacks. While most small businesses are eligible for S status, there are some requirements that must be met, such as limitations on the number and kind of stockholders the corporation may have.
Source:
If a corporation meets the foregoing requirements and wishes to be taxed under Subchapter S, its shareholders may file Form 2553: "Election by a Small Business Corporation" [4][5] with the Internal Revenue Service (IRS). The Form 2553 must be signed by all of the corporation's shareholders. If a shareholder resides in a community property state, the shareholder's spouse generally must ... sign the 2553.
Source:
MORE ABOUT
Subchapter S Corporation