Georgia Subchapter S Incorporations: Disadvantages
February 15, 2009 by admin
Filed under Subchapter S Incorporation
While there are many advantages to electing Subchapter S status for your new Georgia business, there also some disadvantages that are worth noting. Please have a look at both the advantages and these disadvantages before deciding whether a Sub S incorporation election is the right path for your business.
Drawbacks / Disadvantages of Electing Subchapter S Status for your Georgia Business:
- Only one class of stock outstanding
- Process of incorporation requires more time and money than other forms of organization
- S-Corporations are monitored by federal, state and some local agencies, and as a result may have more paperwork to comply with regulations.
- Inflexibility of operations
- Slow to react. Executive decisions need agreement by all shareholders. Disagreeing on issues can produce slow processing times to get over humps.
- Only a portion of health insurance is deductible, versus c-corp where one can deduct 100% (subject to change).
- Shareholders and employees must declare health insurance and
other employee benefits as taxable income if they own more than a 2% share of stock in the Subchapter S corporation.
Anyway you look at it, incorporating has a number of substantial benefits for your Georgia business. Incorporate this year and enjoy the same benefits thousands of others are enjoying right now.
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