Many companies have begun to explore the potential tax benefits of becoming an S Corporation. Most corporations are C corporations, which means both the corporate profit and the shareholders’ dividends are taxed. In an S corporation, such “double taxation” is avoided, because the company’s income or losses are divided among the shareholders, who report the income or loss on their personal tax returns.

If you are considering incorporation for your new or expanding business, your CPA in Tampa at Reliance Consulting, LLC can help you determine whether you are eligible to file as S Corporation.

According to the IRS, in order to be qualified to become an S corporation, the following criteria must apply:

• The company must be domestic.
• The company’s shareholders may not include partnerships, corporations or non-resident aliens.
• The company may have no more than 100 shareholders.
• The company must have one class of stock.

The name is derived from the fact that companies that make a valid election to become “S” corporations will be taxed under Subchapter S, Chapter 1 of the Internal Revenue Code. Owners of an S corporation enjoy many of the same taxation benefits as legal partnerships and also receive limited liability protection from creditors.

For a clear explanation of your company’s options as you explore the possibility of incorporation, and to find out whether you might be eligible to file as an S corporation, contact your CPA in Tampa at Reliance Consulting, LLC. With more than a quarter-century of experience helping businesses in the Tampa, FL region reach their full potential, our staff is here for all your corporate strategy needs.