S corporation?

Question

advantages of an s corporation

Answer 1

Corporate losses can be passed through to the shareholders, and as the owner (and shareholder), you may be able to take the loss against income that appears on your personal return.

You can have the protection of limited personal liability without having to pay corporate taxes.

You can minimize self-employment tax and FICA tax. Your profits, as a shareholder, are not taxed in this manner.

It's easier to raise capital as a corporation than as a sole proprietorship or partnership.

Disadvantages

Numerous regulations and requirements must be upheld by an S Corporation, including a limit on the number of shareholders.

Like a C Corporation, it can be costly to set up and follow corporate formalities.

Close scrutiny by the IRS of shareholder-employees, who must receive reasonable compensation (subject to employment taxes) before any non wage distributions may be made to that shareholder-employee