S Corporations

S Corporations Performed by a students of the BD - 22 group Myalina Sofia Rupisova Polina Mordan’ Sofiar

Contents of this template Corporations of type S are structures legally designed so that their corporate income, losses, deductions and offsets in relation to federal tax "flow" to shareholders. Rupisova Polina

Requirements for s corporations have no more than 35 shareholders have shareholders representing individuals or ownership rights and who are citizens or persons permanently residing in the United States have only one class of shares in circulation not to own 80 percent or more of the shares of another corporation do not have more than 25 percent of income from passive sources (rent, bank interest, etc.) Rupisova Polina

Signs of S corporations Advantages Disadvantages The owners are not responsible for the debts and obligations of Company S and enjoy the protection of their personal assets. the number of shareholders should not exceed 100; Ownership rights are easily transferred through the sale of shares. Only US citizens/residents are allowed to participate End-to-end taxation. The tax status of the S corporation avoids "double taxation". Companies are not subject to corporate income tax. legal entities are not allowed to join the board of directors. Additional capital can be increased by selling shares. Rupisova Polina

Examples Starbucks Corporation is a large corporation specializing in the retail sale of coffee and other beverages. Garmin Ltd. is a company that manufactures navigation systems for cars and other devices. The Hershey Company is a well–known manufacturer of confectionery products. Costco Wholesale Corporation is a large network of wholesale and retail stores. Etsy Inc. is a marketplace specializing in handmade and unique products. Rupisova Polina

Examples of corps Mordan’ Sofiar

Characteristic differences The C corp organization itself is subject to corporate income tax, while the shareholders are subject to personal taxation. Simply put, C corp pays tax on its income in the same way an individual would pay tax on their annual salary — a fixed 21% of operating profit. Since the shareholders of C corp are legally different from the corporation itself, profits distributed to shareholders in the form of dividends or other distributions are taxed at the personal rates of shareholders, which leads to the so-called “double taxation". Corporations C are considered the default type of corporation. When you file a foundation agreement in your chosen state, the state will generally recognize your new corporation as a C corp by default. Myalina Sofia

Definition A C corp, or C corporation, is a legal business structure that is treated as a separate legal entity from its owners. A C corp offers limited liability protection and allows an unlimited number of shareholders. A shareholder can own one share of a company or millions of shares. C corps attracts financing through the sale of these shares. Myalina Sofia

Advantages Your business should function as a C corp if: You want to issue shares to more than 100 shareholders. You want to issue shares to international investors or other corporations. You want to issue both ordinary and preferred shares. Ordinary shares have voting rights; preferred shares do not have voting rights, but holders of preferred shares outperform others in terms of priority when it comes to receiving dividends or payments in the event of liquidation of the company. Myalina Sofia

What needs to be done Register a unique company name. Appoint officials to the corporation (CEO, board of directors). Prepare and submit the founding document to the Secretary of State of your state. Filing documents in some states may have financial advantages over others, for example, in a state where the corporate tax rate is lower. Write the articles of association of the company/ Myalina Sofia

What needs to be done Issue shares — literally. Blank paper stock certificates can be purchased at stationery stores or online. These certificates indicate the percentage of the corporation owned by the owner. The number of shareholders is important here — a C corporation with fewer than 35 people does not need to register shares with the U.S. Securities and Exchange Commission. Apply for a business license at the state, county, and municipal levels. Fill out the SS-4 form to obtain an Employer Identification Number (EIN) from the IRS. Apply for any other identification numbers required by state and local government agencies, for example, to obtain unemployment and disability insurance. Myalina Sofia

When to Choose an S –Corp vs C- Corp Mordan’ Sofiar

Structure S corporations are structures legally structured so that their corporate income, losses, federal tax deductions and credits flow through to shareholders. S corporation shareholders report on their tax returns the gains and losses passed on to them, and the taxes they owe are calculated at personal income tax rates. Mordan’ Sofiar