Through the Law Office of Robert D. Lattas, attorney Robert Lattas serves clients in a number of areas, including real estate and tax planning. He and his team also offer individuals guidance in the formation of a corporation.
All corporations are formed as C corporations. They only become S corporations if the members of the entity decide to file for S status. These two different statuses relate to the taxation of the business. C corporations face double taxation: the entity pays taxes on net income and then shareholders pay taxes on distributions. S corporations, on the other hand, only face taxation on the shareholder level.
To be eligible for S status, corporations must have no more than 100 shareholders who are all resident aliens or citizens of the United States. In addition, the corporation must adopt a calendar fiscal year.
The paperwork involved with obtaining S status can prove daunting. However, the benefits for companies that are small enough achieve S status are great.