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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Call Toll Free: 888-905-7380
Email: Flincorporation@gmail.com
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Subchapter S Corporation: What is it?
February 15, 2009 by admin
Filed under Subchapter S Incorporation
A subchapter S corporation, also known as a “S-Corp” begins like most other corporations – as a profit corporation. Adding the Subchapter S designation occurs when you apply with the IRS, and meeting all requirements, are awarded the Subchapter S designation to use for tax purposes.
Chapter 1 of the IRS Code covers Subchapter S / S-Corps. IRS form 2553 covers election of a corporation of Subchapter S status.
Subchapter S corporations generally don’t pay any income taxes. Instead, any income or loss created by the corporation is divided among, and passed on to the shareholders in the corporation. Shareholders then, are held accountable for the income or loss as filed on their individual income tax returns.
An S corporation gives it’s owners many of the same benefits as partnerships do in the way of taxation – and at the same time having a subchapter S corporation gives some protection from creditors to the business in the case of default on loans. All Subchapter S corporation rules are contained in the IRS Code 1361 to 1379.
Subchapter S corporations, the same as partnerships, operate with income, deductions, and tax credits of the S corp flowing through – to the shareholders annually. As a result the corporate income is taxed at the level of the individual shareholder, and not at the corporate level.
These taxes don’t apply to Subchapter S corporations:
- accumulated earnings tax
- personal holding company tax
- alternative minimum tax
To be lawfully treated as an S Corporation, companies must meet the following tests.
Tests for S Corporation Status:
- Must be a domestic corporation, or a LLC (limited liability company)
- Must have just one class of stock
- Must have less than or equal to 100 shareholders (special rules about who is defined as shareholder in the case of family members.)
- Shareholders must be citizens of the USA or residents, and must be actual persons.
- Shareholders share profits and losses proportionate to their interest in the Subchapter S business.
If a legal corporation meets all the previous requirements and wishes to be taxed under Subchapter S, its shareholders can file Form 2553: “Election by a Small Business Corporation” with the 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 also sign the 2553.
If you wish to elect the Subchapter S designation you must file IRS form 2553 by the 15th day of the 3rd month of the tax year you wisht the election to be effective, or at anytime during the previous year. Sometimes the IRS is flexible about letting a late Subchapter S election get approved – congress has directed the IRS to show leniency with late submissions.
Some states require a separate state level Subchapter S election.
Georgia is not one of these states.
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Call Toll Free: 888-905-7380
Email: Flincorporation@gmail.com
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Sub S Discount
April 20, 2008 by admin
Filed under Featured 1
Our Subchapter S incorporation has been our longest running discounted service on this site yet far. This special offer has been really successful over the months and we’ll likely be able to keep this going through the end of this year.
This subchapter s 10% discount has been reflected on all payment forms and is in effect today.
Your Georgia Subchapter S Corporation Filing Includes:
- Georgia Corporation name search
- Corporate filing with Georgia State
- All Georgia State filing fees
- Same business day filing service
- IRS link to get Tax-ID for free
- Assistance with Form 2553 (Subchapter S election)
Total, all-inclusive Package just:Â $259 $235
If you are considering incorporating your new Georgia business as a subchapter s you’ll find our online sub s form here.
If you want to fax your form in there are links at the top of that page so you can go to the Google Doc fax form and print the page on your printer, fill it out and send it by facsimile machine.
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Call Toll Free: 888-905-7380
Email: Flincorporation@gmail.com
Question or Comment? Support Form
