After you have formed your corporation, you can decide to become a Sub-chapter S Corporation.
What is a Sub-chapter S Corporation?
A Sub-chapter S Corporation is a corporation which elects "small business" status, which allows the corporation the benefits of limited liability of a corporation, but the tax rate of the individual shareholders.
What Kinds of Corporations are Qualified to Elect Sub-chapter S Status?
The IRS has 8 qualifications for Sub-chapter S status, including:
- It must be a domestic corporation, with no foreign investors;
- It must have no more than 100 shareholders;
- It has only one class of stock;
- It must use a December 31 year-end.
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