There are no doubts that the S corporation is leading the pack among other business structures, since it provides the business owners with tones of benefits. Before this business structure came into wide consideration, most of the entrepreneurs had to choose their business structure from C Corporation, or partnerships. Both choices are not the best decision for small businesses, therefore in 1946 the Department of Treasury created the S corporation. It provides entrepreneurs with full liability protection.

The Significance of S Corporation

Back in 1958, the maximal income tax rate was 52% for corporations and nearly 92 % for individuals. A shareholder had to pay nearly 60% a federal tax. Thanks to the creation of S Corporations, most of the entrepreneurs got rid of double taxes and could easily run their business in the United States.  This period of time was considered to be the beginning of the blooming of small businesses. Since then, S Corporation is considered to be one of the most demanded business structures for most Americans.

The popularity of S Corporation is growing day by day; however, the rules remain constant:

  • Limited number of shareholders
  • Having solely a single class of stock
  • Limitations in who can have shares in S Corporation


Upgrading of the S Corporation

The primary goal of S Corporation is to continue to stay competitive among the other business structures, such as LLC or C Corporation. There are several issues which should be solved first. Among them: tax code reforms, and reducing business income tax rates. In passing years, S corporation rules have become more flexible for most of the entrepreneurs, and have had a positive influence on American economy.

Created in 1996, the S Corporation Association is considered to be one of the most powerful organizations all over the United States. The main mission of the S-Corp community is to protect Americans from excessive taxes and keep the S corporation model competitive along with other business structures.


S Corporation in 2020

S Corporation provides business owners with tones of advantages: The main benefit is that you are free from paying federal taxes.

By registering under the S Corporation, you are able to establish credibility with your customers, employees, and suppliers. Since the S Corporation pass-through entity, the corporation’s profits are only taxed once double taxation of dividends is avoided.

Another advantage of the S Corporation is that the business owner’s personal assets are protected from your business ones. Another bonus is the partnership between the owners since the ownership interests can easily transfer onto the owners by avoiding any tax consequences.


If you are thinking that S Corporation is the best choice for your small business and want to obtain it as soon as possible, then Prestige Auditors can help you pass the whole process of getting all the necessary documents in the shortest period of time. Due to the grace of our team, you will get all the required paperwork and start your business confidentially.