Standard and Sub-chapter S Corporation Formation
If you are starting a new business and are considering whether to incorporate, you may have questions about the benefits and disadvantages of incorporation and whether a standard “C” corporation is preferable for your situation or election of Subchapter “S” status. There are a variety of factors to take into an account during business formation, including tax considerations, liability concerns and your business goals.
At the law firm of Farrell & Martin, we provide a wide range of services for business owners in St. Charles County and the surrounding communities of Missouri, including business formation and entity selection. We will look at your situation and your goals to determine whether a business corporation or a limited liability company is the correct entity for your unique business needs. We can also help you draft agreements and other materials, including contracts and employment agreements. When disputes arise, our lawyers are seasoned litigators who can help you protect your rights.
Contact us to speak with an attorney about the formation of your business and learn more about “S” and standard “C” corporations in Missouri.
Benefits of “S” and “C” Corporations
“S” corporations are corporations that have made elections under the sub-chapter S of the IRS tax code. Sub-chapter S allows for special tax treatment by the IRS and requires several considerations to be met in order for the election to be made, including limits on the number of shareholders and the consent of all shareholders to the “S” corporation status. While “S” corporations do not have a corporate tax liability as do a standard “C” corporation, it can be more difficult to reinvest profits as they are earned in an “S” corporation.
Standard “C” corporations are corporations where income tax is paid on the profits of the corporation and any shareholder dividends are also taxed against as income to the shareholders. This income tax is taken after company salaries have been paid and employee benefits may be deducted from the tax amount, however, the tax burden of a C corporation is one of the entity’s main disadvantages. This entity may be better for profitable and growing companies, however, since it is easier to reinvest the profits into the business.
At Farrell & Martin, we can help you draft all of the documents that are required to form your business, such as articles of incorporation, bylaws, tax forms and business meeting minutes. We will guide you through the formation process in order to shield you from personal liability and start your business off on the right track.
Contact Us to Incorporate Your Business
Learn more information about incorporation in Missouri and contact us at the law firm of Farrell & Martin. Schedule an appointment for a free initial consultation and discuss your business goals with an experienced attorney.
Call us at 636-397-2600 to schedule an appointment.