Welcome to Being an S Corporation Owner!

Welcome to Being an S Corporation Owner!

Section 1: What is an S-Corp?
An S Corporation, or S-Corp, is a type of business structure in which the corporation itself is not taxed, but the profits and losses of the corporation are passed through to the shareholders and taxed on their personal income tax returns. This means that the S-Corp offers the liability protection of a corporation while avoiding double taxation.

For example, let’s say that you own an S-Corp and the company makes a profit of $100,000 for the year. Instead of the corporation paying taxes on the $100,000 and then you paying taxes on any distributions you receive, the $100,000 is passed through to you and any other shareholders, and you are each responsible for paying taxes on your individual portions of the profit.

Section 2: IRS Rules for an S-Corp
In order to qualify for S-Corp status, a corporation must meet certain IRS requirements, including:

1. Be a domestic corporation.
2. Have only allowable shareholders, including individuals, certain trusts, and estates and not have more than 100 shareholders.
3. Have only one class of stock.
4. Not be an ineligible corporation, such as a financial institution or an insurance company.

Once a corporation has met these requirements and has been granted S-Corp status by the IRS, it must follow certain rules and regulations to maintain its status.

Weekly Tasks:
There are no specific weekly tasks that an S-Corp owner needs to do, but it’s important to keep up with the day-to-day operations of the business and make sure that everything is running smoothly.

Monthly Tasks:

1. Review financial statements: Take a look at the company’s financial statements to ensure that everything is accurate and up-to-date.
2. Reconcile bank accounts: Make sure that all bank transactions have been recorded correctly in the company’s accounting system.
3. Process payroll: If the company has employees, payroll needs to be processed on a regular basis.
4. Be sure the shareholder is paid a reasonable salary for the work they will be doing.

Quarterly Tasks:

1. File payroll tax returns: The company must file quarterly payroll tax returns with the IRS and state tax agencies.
2. Pay estimated taxes: If the company expects to owe taxes at the end of the year, estimated tax payments need to be made on a quarterly basis.
3. Review shareholder agreements: It’s a good idea to review the company’s shareholder agreements on a regular basis to ensure that they are still relevant and accurate.

Yearly Tasks:

1. File annual tax returns: The company must file an annual tax return with the IRS.
2. Hold an annual shareholder meeting: The company must hold an annual shareholder meeting and document the proceedings in meeting minutes.
3. Review corporate bylaws: It’s a good idea to review the company’s bylaws on a yearly basis to ensure that they are still relevant and accurate.

In addition to these tasks, it’s important to keep accurate records and maintain good communication with shareholders, employees, and other stakeholders.

Owning an S-Corp can be complex, but with proper planning and organization, it can be a rewarding and profitable venture. If you have any questions or concerns about owning an S-Corp, it’s always a good idea to consult with a qualified accountant or attorney, The Benjamin Wolf Group would love to be your trusted advisors feel free to reach out to us today!