Advantages of forming an S-Corporation

First of all, the tax system for an S-Corporation allows small businesses to operate based on a "pass-through" tax system similar to that of a Limited Liability Corporation (LLC).

When choosing S-Corporation status, the owners pass the profits or losses of the company to the shareholders, who in turn allocate those figures on their personal income tax returns. This method has obvious benefits to a corporation if the owners expect to experience an initial loss in the beginning months of their business.

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Source : Business Documents Filing in 50 States