An S corporation, also called an S Corp, is a business entity comprised of a single person or several people, and has filed articles of incorporation in its respective state.
S corporations elect to pass corporate income, losses, deductions, and credits through to their shareholders and not the corporations themselves. Shareholders are thus responsible for reporting income and losses on their personal tax returns and are taxed per their individual incomes.
The benefit of an S corporation is that employees avoid double taxation. Whereas a traditional corporation pays both corporate taxes and income taxes on shareholder dividends, an S corporation is taxed only once through the shareholders.
However, S corporations are responsible for certain gains and passive income, and they have specific requirements that must be met before qualifying for S corporation status.
Those requirements include:
An S corporation should obtain what is known as an Employer Identification Number (EIN), also called a Federal Tax ID number.
The Internal Revenue Service (IRS) issues EINs to distinguish various business entities; this identifier will be a nine-digit number specific to your company.
Even though shareholders report profits and losses on their personal tax returns, it’s wise to obtain an EIN for other business matters that will inevitably arise. You will need an EIN in the following instances:
Don’t wait to get your Federal Tax ID for your S corporation. Our online forms are quick to read and easy to navigate, and we work hard to get your EIN to you quickly and professionally.