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An S-Corporation receives special tax treatment from the IRS, which allows it to be considered a pass-through entity. All income of an S-Corporation is reported by the shareholders as personal income.
To become an S-Corporation, a company must first incorporate as a C-Corporation and then file Federal form 2553 with the IRS.
To qualify for S-Corporation election, a company must have no more than 75 shareholders; all shareholders must be individual people, no shareholders may be non-resident aliens; and the company must have only one class of stock.
Many companies offer online services which can assist you through the incorporation process. If you are not sure if your company should elect S-Corporation status, you may want to consult a lawyer or attorney.
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