A lot of business structures, partnerships or even sole proprietorships, have been wondering what is all about with S Corporation. How it helps the business? What benefits it brings? And does it have bad effects? There are many questions that were left hanging when a business will incorporate to this corporation. The S Corporation for Internal Revenue Service is pass-through entity because of the way you file the Article of Incorporation. The paper works are files through the Secretary of States or any government form in the same level. You can look over Florida Divisions of Corporation for this company. But before you start filing, you have to get to know and answer all your questions about this corporation. Know a little bit about them below.
What are the benefits?
- Easy ownership transfer. Unlike LLC, this corporation does not have hard process when it comes to the shareholder wanting to transfer the ownership. It won’t need to pass some accounting details or require some adjustments on the property.
- Add credibility. This is very beneficial to newer business to be trusted by other investors. It is also helps them to get approval if they apply to bank loans.
- Protect personal assets. To the shareholders, they are at ease that their assets will not be touched. It aims to protect and separate personal assets of shareholders to the creditors. They are not allowed to touch it for the sake to pay the debts and liabilities of the corporation. Website such as www.sunbiz.org can inform you more about this company.
What are the drawbacks?
- A little less flexible. It is a one-class-of-stock restriction which does not allocate any income and loss to the shareholders.
- Expenses on ongoing and forming fees. When you are filing for the incorporation, there are fees not just one that are to be paid. Though it is not that expensive but comparing with sole proprietorships or general partnerships, it is a little costly.
These are only the few things you will learn about S Corporation and the effects on your business. Read more about reviews and comparison to Llc.