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tp://www.tax-definition.org/Define-Payroll-taxes.html
Description: The "C" and "S" corporations refer to the
Internal Revenue Code's subchapters. The "S" corporation status
eliminates the possibility of double taxation on the profits in
businesses.
There are many things that you are required to do before filing
your taxes if you're small business owner. The IRS tax code has
recognized different kinds of corporations, namely, personal
service, non-profit corporations, and financial institutions.
The most favorite legal structures for all the tax paying
business owners are "C" and "S" corporations. The "C" and "S"
corporations refer to the Internal Revenue Code's subchapters.
The corporations are differentiated by the way in which the
incomes are reported.
There are many benefits in selecting the "S" corporation status.
It eliminates the possibility of double taxation on the profits
in businesses. The profits of "S" corporations are taxed
directly to the shareholders and the business owners. No federal
corporate taxes are to be paid; just one annual tax return is
supposed to be filed with this status.
On the other hand, "C" corporations have to pay the income tax
at two levels, one at the corporate level and the profits of
individual shareholders at the other. The losses in "C"
corporation remain within the corporation.
The shareholders in "S" corporations take their operating losses
on their own returns. The limited liability is combined with the
pass-through tax treatment that allows deductions and incomes to
go directly to the shareholders. The result is the same as that
of a limited liability company, sole proprietorship, or
partnership.
Even though an "S" corporation is not considered to be a
tax-paying entity, it has to report taxes. Form 1120S has to be
filled while filing the annual corporation tax return. The form
gives the details of the income, expenses, profits, and losses
of the corporation. The shareholders of this corporation are
issued separate forms known as the Form K-1s. This form reports
about the income that the shareholders get from the corporation
along with their tax returns.
The people employed with an "S" corporation also get taxed and
their taxes are filed along with the company. The "S"
corporations are supposed to file their state tax returns
though. It is important to meet the deadlines for filing your
taxes. You are supposed to file the Form 2553 with the IRS
before the 15th day of the third month after the taxable year
for your corporation begins.
If you're unable to file your tax on time due to a plausible
reason, you are given additional six months' time. In case of
further delay, for about a year, you're given the choice of
electing the "S" corporation status in the next year. You're not
supposed to fill up the Form 2553 till the corporation charter
is granted by the state. Usually, the President of an
organization is supposed to file the tax returns.
Financial Records Information :
http://www.tax-definition.org/Define-Financial-records.html
The "S" corporation is supposed to file and pay the employment
taxes, where the shareholders are spared from the pay-estimated
taxes. To elect the "S" corporation status, you need to get
consent from the shareholders, present as well as prospective.
Unless and until all the shareholders give their consent, the
election for "S" corporation remains invalid.
Ta
x Tips for S Corporations :
ht
tp://www.tax-definition.org/Define-Payroll-taxes.html
About the author:
Howard Schwartz is a partner in several business strategy
groups, including HJ Ventures International, Inc. Howard has
worked with hundreds of entrepreneurs worldwide with a focus on
writing Business Plans for companies interested in raising
capital from Venture Funds and Angel Investors. Howard's
business plans have secured several million dollars in funding.
For more information:
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