If you want to incorporate, but aren’t sure you’re ready for the massive undertaking forming a corporation entails, you may want to start out as an S corporation.
Owners still receive complete liability protection, but there are some appealing tax benefits — profits and losses are passed through to shareholders and are included on their individual tax returns (which means you are never double taxed). It should also be noted that if the S corporation does not have inventory, they can use the cash method of accounting, which is much simpler than the accrual method.
However, S Corporations are subject to many of the same requirements as corporations, so there are still very high legal and tax service costs associated with this type of structure. And though the S corporation can sell stock, they are limited to issuing common stocks only.
At King Law Firm Attorneys at Law, Inc., we’re here to help you incorporate so that you are in compliance with all federal and state regulations. Contact us to discuss whether a corporation is right for you.