• October 2019
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S-Corporation

scorp blur

Start your company right.

S Corporation (S-Corp) lawyers will help you receive personal liability protection, easily transfer the sale of stock, deduct business expenses, and more.

– Second opinion can’t hurt

– Long-term stability

– Get approved the first time


Why an S-Corp

An S Corporation (S-Corp) is a corporation, limited partnership or limited liability company (LLC) that has made a special “S” election with the IRS. Like LLCs and C Corporations (C-Corps), S-Corps provide their owners with personal liability protection. The S-Corp, like the LLC, is a pass-through entity for federal taxes. Basically, that means that the taxable profits or losses for the business are passed through to the business owners, who record these as part of their personal tax filings.

There are other things to like about S-Corp business: ownership can be easily transferred through the sale of stock, business expenses are deductible, and, like C-Corps and LLCs, S-Corps are seen as more legitimate to the general public than a sole proprietorship or general partnership. There are important restrictions to point out for S-Corps though. S-Corps are limited to just 100 shareholders, making it difficult if you’re considering expanding your company to a larger market with bigger investors down the road. Also, S-Corps can only be owned by U.S. citizens or residents. So once again, depending on where you want to expand and who may be an investor, you will want to keep this limitation in mind. Lastly, S-Corps must be owned by individual shareholders and cannot be a subsidiary of some other type of business entity.

The benefits
Why an S-Corp
An S Corporation (S-Corp) is a corporation, limited partnership or limited liability company (LLC) that has made a special “S” election with the IRS. Like LLCs and C Corporations (C-Corps), S-Corps provide their owners with personal liability protection. The S-Corp, like the LLC, is a pass-through entity for federal taxes. Basically, that means that the taxable profits or losses for the business are passed through to the business owners, who record these as part of their personal tax filings.

There are other things to like about S-Corp business: ownership can be easily transferred through the sale of stock, business expenses are deductible, and, like C-Corps and LLCs, S-Corps are seen as more legitimate to the general public than a sole proprietorship or general partnership. There are important restrictions to point out for S-Corps though. S-Corps are limited to just 100 shareholders, making it difficult if you’re considering expanding your company to a larger market with bigger investors down the road. Also, S-Corps can only be owned by U.S. citizens or residents. So once again, depending on where you want to expand and who may be an investor, you will want to keep this limitation in mind. Lastly, S-Corps must be owned by individual shareholders and cannot be a subsidiary of some other type of business entity.
The benefits
Second opinion can’t hurt

Are you correct in assuming that your company should be an S-Corp? It’s best to find that out before actually incorporating a company or forming one!

Get approved the first time

It’s helpful to have a professional double-check the materials you’re submitting to your given state. Forgetting something will only delay your ability to be protected from personal liability, plus some formation applications are non-refundable.

Long-term stability

S Corporation lawyers who assists you during formation will have greater familiarity of your company and its needs going forward, than a lawyer you’re forced to hire when something goes wrong.


FAQ


Should I form a C Corporation or an S Corporation?

It’s hard to say without knowing specifics on your company. Given the restrictions that come along with an S-Corp, a C-Corp offers a bit more flexibility when starting a business. A C-Corp is a standard corporation whereas an S-Corp has a special tax status assigned to it by the IRS. Both types of corporations offer limited liability protection, have similar structures, corporate formalities, and both are considered separate entities. However, despite their similarities, they have distinct differences.

C-Corps are separate taxable entities and are subject to double taxation. Conversely, S-Corps are pass through entities and pay no corporate income tax. As a result, taxes are paid at the individual level. S-Corp business restrictions include no more than 100 shareholders and they must be U.S. citizens or residents. They can also not be owned by other corporations, LLCs, or partnerships. Finally, S-Corps can only have one class of stock while a C-Corporation can have multiple classes. Interested in a S-Corp? Check out more.

Where should I form an S-Corp?

If your company isn’t a big operation or operates in a small area, it’s probably okay to incorporate in your home state. For other larger S-Corps, some of the most popular states to incorporate include Delaware, Nevada and Wyoming. If your company incorporates in a foreign state then it’s crucial to abide by rules governing “foreign qualification.” This is when states require S-Corps to pay additional taxes and fees for conducting business in state that it is not incorporated in.

What’s limited liability protection?

It’s the biggest reason why people choose to incorporate their businesses. It provides owners protection from their personal assets against creditors’ claims. As long as the owners truly treat their business as a separate entity, they retain such protection.

What’s an EIN?

It’s the Internal Revenue Service’s (IRS) way of identifying businesses for tax purposes. For federal income tax purposes, a C-Corp is recognized as a separate tax paying entity.

What’s a registered agent?

A business or individual designated to receive service of process when a business is a party in a legal action or when the state attempts to communicate with the company. Some states, like Delaware, require entities registered within its jurisdiction to maintain an in-state registered agent.


Reviews 

 


Daniel, H. | ★★★★★

“Simple and trustworthy system. The project manager through text message is a good idea and helps a lot with the process, especially their timely response.”


Rafael, R. | ★★★★★

“I was very comfortable with the environment it was my first meeting and I knew it was on the right track I did understand my lawyer I was listening I did absorb the information given to me.”


Ori, A. | ★★★★★

“Great experience all around, LawTrades was just so much more personal and much better than other startup/online on-demand solutions for legal work,. Almost feels like I handpicked and hired the attorney myself. The Attorney was available to answer questions by phone or text message, so was the LawTrades rep who set the whole thing up. And when setting up new entities you always have questions, so this was a big deal for me. The Attorney assigned to my project was available on demand to help out explain things every step of the way and I think the guys at LawTrades have done a great job with making you feel extremely comfortable. After all was done I even got an email and a call from one of the co founders of the company to make sure I had a seamless experience. I never got a call from other companies I had used in the past like Legal zoom and the whole thing always felt so automated. Yes, granted Legal zoom probably have way more clients than Lawtrades and as such would not be feasible for their management to call everyone, however, that was a nice touch which I do appreciate. I will definitely be heading back to Lawtrades whenever I require legal assistance.”


Tamas, P. | ★★★★★

“Price. I know what I am paying instead of getting surprised. Transparent pricing I know what each bit costs instead of getting a big bill and not knowing what parts cost what and how much was for service vs hard fees such as filing fees. Also things progressed rapidly.”


Yash, P. | ★★★★★

“Amazing service, i cant get over texting to get a lawyer. it’s revolutionary and can legitimately improve the US justice system for people with no access to quality lawyers.”


Janet, S. | ★★★★★

“Quick and easy, I used LawTrades and worked with attorney Jonathan Hood to review a NDA. I got my questions answered right away. Arman was a great help making the connection. Would highly recommend the service.”