The precursor in many ways to the LLC, the S Corporation is a “flow-through” business, meaning the business’ income is taxed on the owner’s individual 1040 and not at the company level, avoiding double taxation.

S Corporations still serve several purposes today. They allow for reduced employment tax for their owners, and they generally escape the highly-[tipsy content=”If the business distributes certain property, there may be deemed distributions, deemed sales, or other complex calculations and concepts, most of which may generate tax for a partner or taxable gain for the partnership. Partnership taxation is one of the most complex areas of the Internal Revenue Code.” group=”9″ use_oembed=”false” ]complicated partnership rules[/tipsy]. They also require simplified owner income allocations. However, they also come with their own set of rules and restrictions.

S Corporation owners who are employees may still have many benefits, something partnership or LLC owners are not allowed. The professionals at SundbergTC can advise you on the costs and benefits of getting into an S Corporation and whether or not it’s right for you.