Forming an S corporation offers a number of advantages for independent salespeople, real estate agents and others, according to certified public accountant and Christian Post blogger John Dillard.
The first advantage to S corporations, according to Dillard, is that business incorporation gives the company instant legitimacy. He says if a business is not incorporated, many state or local governments will not buy from or lend to them.
Dillard also says that S corporations give entrepreneurs personal liability protection in the event that someone tries to sue them. He says that the world is "full of people who are looking to make a fast dollar" and that "courts are full of frivolous cases where greed rather than fairness are the watchword."
S corporations also offer significant tax benefits to some types of entrepreneurs. Dillard says that currently in an S corporation, after owners salaries are deducted, all shareholder distributions are exempt of employment taxes.
To be an S corporation, the Internal Revenue Service says domestic companies must have fewer than 100 shareholders – all of which must be legal U.S. citizens or residents – and have given out just one type of stock.
Related posts:
- What are the Advantages of a C Corporation?
- Corporate veil hard to pierce: Entrepreneurs may protect themselves against lawsuits with business incorporation
- S Corporations could give businesses a competitive edge in trying times
- The Advantages of Forming an S Corporation
- C-Corporation vs. S-Corporation
