Describe the differences between an S-Corporation and a partnership.

What is the signficant difference between organizing an S-Corporation over a
partnership. Does S-Corp have to have at least two members, what other key
attributes should be considered?
Reply to
grs
"grs" wrote
"Organizing", to me, means the actual formation process, which varies from state to state. Check with the Secretary of State for the state you plan to start and operate your business in, as they'll have the specifics of how to organize the entity in that state.
The basics include writing the articles of incorporation, or acticles of formation of the partnership, completing the forms required by the state, and submitting a check. Other submissions or other steps may be in the mix depending on the type of business activity you are starting.
Federal tax ID's need to be applied for, and depanding on if the business will have employees, state withholding and other payroll related tax numbers need to be applied for.
In addition, if you have sales subject to tax, plan to sell alcohol or other controlled substances, or plan to have dealings with other regulated industries, other applications for permits, licenses and the like are required.
An "S" corporation can have only one shareholder (not members) if it wants to or needs to. Again, state laws vary, but often times state laws spell out how many officers the company must have, and if those can be held by the same person.
The most important issues to consider have to deal with the formation of and dissolution of the entity. Second issue is the annual tax implications on the owners of the business. The type of entity you form has very little impact on the day-to-day operations of the business.
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paulthomascpa
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