S corporation ...

[hockey97]

I been reading the wiki. at : S corporation - Wikipedia, the free encyclopedia

I have a question, If I were to incorperate a S corporation would I need 100 shareholders to qualify for it??

What is a S corperation good for??

[dvduval]

I've always thought of an S corporation as a sort of "pass through" entity. All the money that comes in is paid out to the shareholders, who may be only a couple of partners. If you read on the wikipedia page, it says no MORE than 100.

[JLeezer]

"Must not have more than 100 shareholders." -- from the wiki which you read.

Think of it like a speed limit. If the speed limit is 65MPH, you can generally go 65 or less, but not higher. Same thing here. It is a limit.

Given your questioning of this, I would highly recommend sitting down with a very good tax attorney and accountant PRIOR to filing for any entity with your state. I'm very sick right now, but I'll be more than happy to add more detail tomorrow at some point.

[hockey97]

sorry to hear that your sick hope you feel better.

Thanks for the help. SO I don't need share holders right? It's just I will be able to have 100 share holder max after that if I need more would I then need to incorporate into a c corporation.

[StealYourDreams]

Subchapter S is a tax status, you can revert back to a C-corp if need be.

[JLeezer]

sorry to hear that your sick hope you feel better.

Thanks

Thanks for the help. SO I don't need share holders right? It's just I will be able to have 100 share holder max after that if I need more would I then need to incorporate into a c corporation.

You could be forced back to a c-corp for other reason, or if your shareholders are not closely related (by this, they do not mean an actual family member, but some you know personally as opposed to a stranger that says, "Hey, can I invest?") So again, I'd highly recommend talking your immediate and future plans over with a good tax attorney and accountant. They may cost you a couple hundred to a thousand dollars, but at least you'll know what you need to know after that.

And regarding the tax status, that's absolutely a good point. We are running our corporation as a c-corp because if we were to have the profit pass through to us as personal income, we'd be getting taxed at a higher rate due to my existing income from my job. If I were to quit my job, it might be wise to elect for s-corp status once we meet the requirements.

[hockey97]

ok thanks I got it now.

[BusinessAdviser]

Unless you have a large number of investors and/or an expected high rate of ownership interest transfer, you might look into an LLC, which is easier, more flexible, and often cheaper than an S Corp, all while recwiving the same tax benefits.