At the Piatchek Law Firm, our attorneys assist clients in establishing subchapter S corporations (also known as S-corporations). There are two types of special corporations under federal tax laws: subchapter C corporations and subchapter S corporations. A subchapter S corporation is recognized by the Internal Revenue Service (IRS) as a special corporation afforded a different income tax treatment. In addition, the IRS has technical and complex rules concerning subchapter S corporations. Failure by the corporation or any of its shareholders to observe the rules could have significant adverse tax consequences.
Special Rules for S-Corporations
An S-corporation is formed like a regular corporation. However, there are certain rules the S-corporation must follow in order to retain its corporate status. Penalties for failing to adhere to the special rules set for S-corporations could include losing the limited liability or tax benefits that come with its formation. Rules for S-corporations include the following:
- Must hold annual meetings of the corporation’s shareholders and directors
- Must make accurate records of all meetings and business decisions made by the board of directors
- Must file corporate taxes
- Must keep accurate financial records
- Must keep shareholder personal assets separate from the corporation’s assets
Our knowledgable business attorneys can help you decide what kind of business formation would best serve your interests. The laws concerning business formation are complex and vary from state to state, so the expertise of an experienced business attorney is invaluable. For assistance regarding the formation or management of an S-corporation, please call us today at 417-882-5858 to schedule a complimentary consultation.