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What are the benefits of an S corporation?

Are you in the process of launching a business? Are you concerned about choosing the right structure? Have you come to learn more about an S corporation?

There are many advantages of an S corporation, which is why so many entrepreneurs turn their attention to this structure. While it may not be the right choice for you and your new company, it's something to consider nonetheless.

Here are some of the many S corporation advantages you should become familiar with, all of which will help you make an informed and confident decision:

  • Protected assets. Simply put, an S corporation set-up helps to protect the personal assets of all shareholders. If you want peace of mind in regard to your personal assets, an S corporation will give you just that.
  • Pass through taxation. An S corporation is not required to pay federal taxes at the corporate level. Instead, business income and losses are passed through to shareholders.
  • Easy to transfer ownership in the future. Do you have the feeling you may want to sell your business in the future? Do you have reason to believe that passing it along to a family member at some point would be in your best interest? With an S corporation, you can easily transfer ownership, without having to worry about any tax consequences.
  • Credibility from the get-go. As you know, establishing a new business can be a difficult task. With an S corporation in place, it's easier to reach a high level of credibility in a short period of time. It's not the only thing you need to reach the top of your industry, but it can't hurt.

These are just a few of the many advantages of an S corporation. It's your responsibility to compare these benefits with other business structures, such as an LLC. Along the way, you should also pay attention to any potential drawbacks that could get in your way.

When the time comes to choose a business structure, don't stop at the benefits of an S corporation. Also, learn more about the legal process of implementing the structure that makes the most sense for you and your start-up.

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