One of the first major decisions you will make when forming a business is choosing its structure. This choice is crucial, as it can have implications for the control you have over the company, the amount of taxes you pay, and the personal risk you face from creditor claims.
For many people, an S-corporation is the ideal structure. It is a great option for small- and medium-sized businesses, and it comes with favorable tax treatment and liability protection for owners. An experienced attorney could explain the benefits of an S-corporation in more detail, so let an Alamo Heights S-corporation lawyer from Begum Peláez-Prada PLLC advise you of your options.
An S-corporation—informally known as an S-corp—is a type of business structure available under state law. It differs from standard corporations in beneficial ways, including having a favorable tax status. Many people choose this option because it melds together the favorable traits of different types of businesses. In addition, it is ideal for small companies with as few as one owner.
There are some specific requirements for a company to qualify as an S-corp. It must be a domestic company with no more than 100 shareholders. There can only be one class of stock, and certain entities are barred from having ownership rights.
These rules can be more complicated than they appear. Thankfully, an Alamo Heights attorney could ensure compliance with the law when setting up an S-corporation.
There are many options regarding the type of business you want to create. Each has its benefits and drawbacks, but for many people, the S-corporation is the ideal mix of tax benefits and flexibility.
One of the biggest downsides of creating a standard corporation is the heavy taxation burden. Owners—known as shareholders—not only pay taxes on the revenue earned by the company but they are also taxed again on their personal income. That is not the case with an S-corporation, as there are no taxes at the business level.
S-corporations also offer protection from liability for all shareholders. This is important, as it means that owners will not face collection efforts against their personal assets based on claims against the company. Some business structures, like sole proprietorships, leave the owners exposed to liability.
These are only a few of the reasons why many people opt for this approach. Let attorney Sasha Begum review your circumstances and help you determine the best path forward. With the help of an Alamo Heights S-corporation attorney, you could make the best decision available to you.
The process of securing S-corporation status starts with filing a document known as Form 2553, also known as Election by a Small Business Corporation. Once your business is established, there are some unique regulatory issues that can be difficult to navigate without help. For example, shareholders acting as employees must be paid market value for their services. There are also strict rules dividing profits and losses based on the number of shares owned. An S-corporation attorney in Alamo Heights could ensure that all necessary steps are taken to comply with state and federal tax law, as audits are not uncommon.
If you intend to form a new business entity, the S-corp might be the right choice for you. However, there are requirements that must be met to qualify and regulatory issues that are not present with other types of businesses.
Having the support of strong legal counsel could help you make the right choices and prepare you for business success. Reach out to an Alamo Heights S-corporation lawyer today to learn more.
