Start setting up your South Dakota S Corporation now - without any obligation. Save all of your incorporation information until you’re ready to incorporate.
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South Dakota S Corporations are for those who want the limited liability and the more formal structure of a corporation but with pass-through taxation of the business profits. South Dakota S Corporation is simply a standard corporation that becomes an S Corporation when its shareholders elect special tax status with the Internal Revenue Service (IRS) by filing an IRS Form 2553 (after filing its official documents with South Dakota).
Like South Dakota C Corporation, South Dakota S Corporation is recognized by the law as an individual entity, separate from its shareholders (owners), many times treated as a human being. South Dakota S corporation shareholders enjoy limited liability for the debts, obligations and liabilities incurred by the business as well as liability stemming from possible legal action. Protection of shareholders’ personal assets is one of the major reasons South Dakota business owners choose to incorporate. Normally, shareholders cannot lose more than the amount they invested in the corporation. If the corporation goes bankrupt, the shareholders will not be liable for its debts. Should someone sue the corporation and the corporation is found liable, they can take the corporation’s property to satisfy the judgment but if that property does not satisfy the judgment, they will not be able to take a shareholder’s personal assets, i.e. home, car, or bank account. There are exceptions to shareholders’ limited liability to keep in mind. For example an exception to a shareholder's limited liability occurs when the corporation has --recklessly harmed people or has been used to perpetuate a fraud.
South Dakota S Corporation Taxation
Unlike South Dakota C Corporation, South Dakota S Corporation does not itself pay any income taxes. While an S Corporation with more than one shareholder does file tax returns, the individual shareholders (owners) must include their share of the corporation’s income or loss on their personal tax returns, just as is done in sole proprietorships, partnerships and Limited Liability Companies (LLC’s).
To qualify as an S Corporation, an IRS Form 2553 must be filed with the Internal Revenue Service. In very few states, you will also be required to file a separate state election, as specified by that state, in order to qualify as a Sub S Corporation. As of this writing only Arkansas, New Jersey, New York, Ohio and Wisconsin require state level filing in addition to IRS filing. MaxFilings can help you with filing the IRS Form 2553 by preparing the form and sending it to you with instructions for completion and filing with the IRS. Start setting up your S Corporation now
Some Points to Consider When Forming South Dakota S Corporation
Owners & Employees
This information is not an attempt to present all you should know when forming an S corporation in South Dakota but rather to present just some of the basic information about South Dakota S corporations. While we make every effort to ensure its accuracy, MaxFilings cannot and does not guarantee that all of the information is accurate or complete and/or current and it should therefore be independently verified. And, as always, you should seek the advice of qualified professionals who are familiar with your circumstances as well as applicable federal and South Dakota laws.
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