Elegant business-lady in trendy black jacket holding laptop and smiling in a modern looking office.
Brenda Solorzano
June 24, 2022
1 min

How can your Business Qualify for S Corporation Status

Have you considered starting a business and want a tax status that will allow you, as an owner, to start small and grow?

Establishing your business as a S corporation could provide a tax advantage for your business. Let's briefly look into what an S corporation is and how to qualify for the status.

What is an S Corporation?

First, let's learn more about what this S Corporation status is. S Corporation, or S-Corp, is a tax designation defined in subchapter "S" of the Internal Revenue Code. An S-Corp is similar to any other corporation. It’s a for-profit company, incorporated under and governed by the same state corporation laws. It must also observe internal practices and formalities: have a board of directors, write corporate bylaws, conduct shareholders’ meetings, and keep minutes of significant company meetings.

The 5 IRS requirements to obtain S Corporation status

To qualify for S corporation status, the corporation must meet the following requirements:

  1. Be a domestic corporation. Your business must be incorporated in the United States and you must have filed Form 2553 with the IRS.
  2. Have only allowable shareholders. The shareholders may be individuals, certain trusts, and estates or certain tax-exempt organizations (501(c)(3)). Shareholders may not be partnerships, corporations or non-resident alien shareholders.
  3. Have no more than 100 shareholders. The ranks of the shareholders must be limited to individuals, nonprofits, trusts, and estates. In other words, no institutional investors.
  4. Have only one class of stock. A corporation is treated as having one class of stock if all outstanding corporate shares of stock confer identical rights of distribution and liquidation proceeds
  5. Be an eligible corporation. Ineligible corporations include certain financial institutions, insurance companies, and domestic international sales corporations.

Book your tax consultation with me to learn more about how to obtain an S Corporation status for your business and understand the benefits it might bring to you and your tax bill!

Legal Researcher and Contributor: Brenda Solorzano, J. D.

Why hire me?
  • 100% Online and Safe
  • Personal Lawyer
  • Affordable
  • At Sabalier Law, you count with expert legal representation and guidance throughout your entire process as well as support afterwards
  • 100% online services using the latest in secure technology to effectively and successfully represent you and your case no matter where you reside in the world
  • Confidential communication, document review, and legal advise fully protected by the Attorney- Client privilege
  • Unlimited legal consultations via telephone, video-call, and e-mail
  • Fully Billingual communication, and legal services in English and Spanish
  • Expert legal preparation and expedited submission of your documents
  • Constant updates and communication with you on the status of your case, applications, and documents' reviews
  • Timely notification of changes in the laws and procedures that are relevant for your case
  • Attentive personal support throughout our entire Attorney- Client relationship
  • Guaranteed maximum secure electronic payment platforms to ensure smooth and easy payment methods anywhere you are located in the world
© Copyright Sabalier Law 2024
Made with special  by
Javier Ortiz Saorin