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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Email: Flincorporation@gmail.com
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Georgia Subchapter S: Advantages
February 15, 2009 by admin
Filed under Subchapter S Incorporation
There are numerous advantages you’ll enjoy as the owner of a Georgia subchapter S corporation.
- Your Subchapter S corporation is a legal entity separate from the individuals owning the corporation.
- Fractional shares of ownership are easily accounted for and accomodated during the initial stock offering.
- The corporations ability to transact business is not affected by changes in ownership due to the ease of purchase, sale, and giving (gifting) stock.
- Limited personal liability in the case of legal action against the corporation.
- Continuity – the corporation exists until dissolved regardless of the death of one or more of the stockholders.
- Continuity of management
- Interests in the company are easily transferable.
- It’s possible to separate the ownership and the management of the Subchapter S corporation
- A reduced risk of unrecognized equity liquidations because the corporations finances and records must be maintained separately from the individuals running and owning the corporation.
- Losses (net) incurred by the corporation are deductible by shareholders at the individual tax level.
- Stockholders annual meetings along with legal counsel can improve the communication of the corporate members and provide better direction for management.
- Access to much needed credit and resources may be improved, depending on the corporations stellar business record.
- Earnings on “return on investment” like interest, rental payments and other earnings are not subject to self-employment taxes as long as stockholder employees receive an adequate compensation for work performed
Subchapter S election is a popular form of election among new business owners in Georgia and nationwide. Just forming a corporate entity (incorporating your business) in itself gives you a number of benefits tax-wise that you wouldn’t enjoy otherwise.
Starting a business in Georgia is a smart idea.
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Call Toll Free: 888-905-7380
Email: Flincorporation@gmail.com
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