S Corporations Filing The Election

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Getting a corporation designated as an S can be a bit confusing. If you are committed to getting an S corporation, here is how you do it.

S Corporation

The S in S corporation refers primarily to a tax designation. While electing to be an S corporation does have legal implications, such as no more than 75 shareholders, the designation really concerns pass through tax issues. Put in laymans terms, the designation simply means the corporation will pass through its taxes to shareholder in proportion to their ownership interests. This allows shareholders to claim profits and losses directly on their taxes and avoid the double taxation of a C corporation.

To become an S corporation, you must file an election with the IRS. Typically, no documentation is require to be filed with any state entity, but make sure to check you particular jurisdiction. Regardless, the filing with the IRS is made using form 2553 Election by a Small Business Corporation.

To fill out form 2553, you will need to supply the following information:

1. The name and address of the corporation,

2. The tax year to be covered by the election,

3. The date the corporation...

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