S-Corporation Election

Eligibility to elect S corporation status

In order to elect S corporation status, a corporation must satisfy the following requirements:

• The corporation must be a domestic corporation that is organized under the laws of any state of U.S. territory.
• Maintain only one class of stock.
• Maintain a maximum of 100 shareholders.
• Shareholders may only be individuals, estates or certain qualified trusts.
• All shareholders must either be U.S. citizens or residents of the U.S.

How do the shareholders elect S corporation status? 

The election of S corporation status is made by filing Form, "Election by a Small Business Corporation" and filed with the IRS Service Center where the corporation files its corporate federal income tax return. The election of the S corporation status must be unanimously approved by all of the shareholders, as evidenced by having all of the shareholders sign the Form. 

When should the election be filed? 

The Form must be filed on or before the 15th day of the 3rd month of the corporation's tax year in order for the election to be effective as of the beginning of that tax year. A corporation that is on a calendar tax year must file on or before March 15th in order for the election to be effective for that tax year. 

Can the S corporation status be terminated? 

S corporation status can be terminated either voluntarily or involuntarily.

• Involuntarily: An "S" corporation status is involuntarily terminated if any event occurs that would prohibit the corporation from making the election in the first place that is a "disqualifying event". For examples disqualifying event would include having more than 75 shareholders, a shareholder that is other than an individual, estate, or trust, or a shareholder who is a non-resident alien. Generally, the election is automatically terminated as of the date on which the disqualifying event occurs. However, if a corporation has both accumulated earnings and profits as well as passive investment income that exceeds 25 percent of the corporation's gross receipts for three consecutive years, the corporation election will be terminated beginning with the following tax year.
• Voluntarily: An S corporation election may be voluntarily revoked with the consent of shareholders holding more than 50 percent of the outstanding shares of stock (voting and nonvoting) on the day the revocation is made.

After termination or revocation can a corporation , re-elect S corporation status? 

A corporation may not re-elect S corporation status until the 5th year after the year in which the termination or revocation became effective. 

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What is the S-Corporation?

An "S-Corporation" is a regular corporation that has between 1 and 100 shareholders and that passes-through net income or losses to shareholders. An S Corp is a corporation that elects to be treated as a pass-through entity (such as a sole proprietorship or partnership) for tax purposes. Since all corporate income is "passed through" directly to the shareholders who include the income on their individual tax returns, S Corporation are not subject to double taxation.

An eligible domestic corporation can avoid double taxation (once to the shareholders and again to the corporation) by electing to be treated as an S corporation. Generally, an S corporation is exempt from federal income tax other than tax on certain capital gains and passive income. On their tax returns, the S corporation's shareholders include their share of the corporation's separately stated items of income, deduction, loss, and credit, and their share of non-separately stated income or loss.

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DBA / Assumed Name Registration

What is Assumed Name? 

A fictitious business name, assumed business name, or DBA (doing business as), referred to as allows you to legally do business as a particular name at minimal cost, and without having to create an entirely new business entity. You can accept payments, advertise, and otherwise present yourself under that name.

What is the Sole proprietorship? 

A sole proprietorship is a company with one owner that is not registered with the state as a limited liability company (LLC) or a corporation. In some states, a sole proprietorship is referred to as a DBA (doing business as), as in "José Smith, doing business as Smith Heating and Air Conditioning."

Establishing a sole proprietorship is cheap and relatively uncomplicated. You don't have to file any papers to set it up -- you create a sole proprietorship just by going into business. In other words, if you'll be the only owner of the business you're starting; your business will automatically be a sole proprietorship, unless you incorporate it or organize it as an LLC. Of course, you do have to get the same business licenses and permits as any other company that goes into the same business

http://www.infotaxsquare.com/assumed-name.html

Naming an Entity

Choose the name of your entity carefully. It is very important that your name portray the image you want for your new company. Legally, the name you select must not be "deceptively similar" to any existing company or must be "distinguishable on the record" of your state.

For example, if an LLC named Flower LLC exists in your state, you probably would not be allowed to name your business Flour Limited Liability Company. It is possible that the name you select will not be available; therefore, we ask for a second choice on the Entity order form. Additionally, most states require that the name you select show your business is a limited liability company, by including the words "Limited Liability Company," or the abbreviation LLC. If Corporation include the word "Inc" , " Corp" or "Incorporate" , "Corporate".

http://www.infotaxsquare.com/view_article.php?title=Naming%20an%20Entity&id=124

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State of Alabama

Benefits of incorporation in Alabama may be substantial for your business, if your business is located in another state, your home state’s corporate filing fees and reports may still be required. We can provide you with information about your area so you can decide if Alabama corporation is the right move for you. 

There are a number of business entity types to consider when you are deciding the structure of your Alabama business. The most advantageous entities to form in Alabama are typically corporations or LLCs. Although other entity options are possible, these are the entities that offer the highest level of liability protection in Alabama. As you review the characteristics of incorporating or forming an LLC in Alabama, be sure to keep in mind both the present and future needs of your business. Often, when you start a business it begins as a small organization.

InfoTaxSquare.com files business documents with government agencies for its clients as an authorized representative not limited to Alabama corporation division, Alabama secretary of state and Alabama Department of revenue.

We provide the following services in the state of Alabama to assist and expedite our valued customers. To read more please click the following links:

Free Company Name Search

http://www.infotaxsquare.com/secretary-state/alabama.html

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Payroll Tax Services

All businesses or organizations that have employees is obligated to follow certain federal, state and local laws and procedures regarding payroll-related issues. All employers is responsible for withholding the appropriate taxes (federal income tax, Social Security, Medicare, federal and state unemployment taxes, state and local income taxes, state disability taxes, etc.) from their employees' pay, depositing these taxes into the appropriate accounts, paying the appropriate taxing agencies, and filing all of the associated returns.

Infotax Square tailors its services to meet the needs of each individual client, small or large, from various types of industries. Customers may pick and choose from the following services, or turn over their entire payroll for a full service approach.

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