S - Corps Made Simple

“Do I need an S-Corp?”

This is definitely top 5 on my list of client FAQs...so strap in, we’re talking S-Corps.

First and foremost, technically you can’t “have” an S-Corp. What you actually have is S-Corp *tax status.*

Here’s why: You can’t legally form an S-Corp, per se. First, you have to form either a Limited Liability Company or a Corporation with your State, and then you have to choose to be taxed as an S-Corp.

(Reminder: LLCs and Corporations are ways to protect your personal liability when running a business).

TL;DR: The S-Corp is a tax classification. So when you ask if you should be an S-Corp, this is actually a great question for your accountant or CPA. They’ll be able to tell you if electing to be taxed as an S-Corp is a good move (financially) for your business.

With that information, we can then get your LLC or Corporation formed. When we file your formation paperwork with the State of California, we file a separate form telling the State you want to be taxed as an S-Corp!

Anyone forming an LLC in 2021? Let’s chat! (Ideally, you want to talk to an attorney for the legal advice and a tax professional for the tax advice).

*Disclaimer: This post is strictly for general informational purposes only and is not intended to constitute legal advice.