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S Corporation Taxes PAGE4 The S Corporation -- Small Business Equalizer To relieve small businesses from the burdens of double taxation of dividends, while at the same time offering small business owners the liability protection of incorporation, the IRS adopted the S corporation status. By filing Form 2553, you can elect to have your corporation taxed as an S corporation. This means it's taxed under Subchapter S of the IRS Code. Unless you elect to become an S corporation, a corporation is automatically a C corporation. Because S corporation status is intended for smaller businesses, you must meet certain requirements to be eligible. For example, your corporation can only have one class of stock; have at most 75 shareholders; and have no non-individual, non-people shareholders -- remember, corporations as separate legal entities can own shares in other corporations. The difference between C corporations and S corporations is how they're taxed. While C corporations are taxed as separate taxable entities, S corporations are treated as "pass-through entities." In other words, S corps typically pay no income tax. Instead, S corp income "flows through" to the individual shareholders. So, if your S corporation pays dividends, those dividends will be taxed to you, the individual shareholder, at your personal income tax rate. Such dividends are only taxed once. In this way, S corps are taxed like partnerships and avoid the double taxation. This whole scenario depends on corporate form filing..... continued Page 1 - 2 - 3 - 4 - 5 - 6 Enter your search terms Submit search form       Search Idea Cafe Web Small Business Tax Center • Idea Cafe Home • Sign Up • Biz Grant Center • CyberSchmooz •Coffee Talk with Experts • People in Biz Profiles • Starting Your Biz • Biz Planning • Running Your Biz • FREE Trade Publications • Marketing • Financing Your Biz • Human Resources • Legal & Biz Forms • Managing Your Biz • eCommerce • You and Your Biz • Gen X • Work@Home • The Fridge • De-Stress • Send an Award • Send an eGreeting • Yoga @ Your Desk • Web Guide • Idea Cafe in the News • About Idea Cafe • Advertise on Idea Cafe • Contact Us • Privacy Policy • Site Map • Small Biz News Copyright 1995-2024, Idea Cafe Inc. Downloads are for personal use only, not for resale to others, and may not be reprinted in any form without written permission from Idea Cafe Inc. DISCLAIMER: We hope whatever you find on this site is helpful, but be cautioned that it may not apply to your own situation, or be totally current at any given time. Idea Cafe Inc. and all of its current and past experts, sponsors, advertisers, agents, contractors and advisors disclaim all warranties with regard to anything found anywhere on this family of websites, quoted from, or sent from Idea Cafe. and its related sites, publications and companies. We also take no responsibility for comments published by others on these pages. TRADEMARKS: The following are Registered Trademarks or Servicemarks of DevStart, Inc.: Idea Cafe®, Online Coffee Break®, The Small Business Gathering Place®, Take out Info®, Biz Bar & Grill®, Complaint-O-Meter®, A Fun Approach to Serious Business™, CyberSchmooz™, and BizCafe™.

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