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Last week we talked about the pros and cons of S Corporations. This week we will continue with some additional information. S corporations have the same liability protections as regular (C) corporations. The biggest advantage of an S corporation is that S corporations are tax-transparent. With few exceptions an S corporation is not taxable on the income it earns.
Companies that expect to generate losses in the early years should consider using tax transparent business forms, such as S corporation so that owners who are active in the business may be able to apply the company’s losses against income from other sources.
Due to complexities in every situation, please be sure to contact your tax advisor when making entity selection.