Forming an S Corporation in Mississippi Research Paper

Forming an S Corporation in Mississippi - Research Paper Example The S corporations are liable for tax on individual, integrated gains and passive returns (Goldstein & Davidson, 1992). Necessary documentation, filling fees, and filing For an entity to qualify for S corporation status, it must be a domestic corporation with shareholders, defined trust, and estates and should not constitute partnerships, corporations or nonresident foreign shareholders. Furthermore, it should not have more than 100 members, have one kind of stock, and not be an ineligible business entity (McQuown, 2004). In order to become an S corporation, the corporation must submit Form 2553 Election by a Small Business Corporation (PDF format) signed by the owners. The Mississippi S Corporations are for those who focus on the limited liability and the bureaucratic composition of corporations but containing a pass-through taxation of the business earnings (McQuown, 2004). The Mississippi S Corporation is simply a set business that becomes an S Corporation when its shareholders el ect the outstanding tax status with the Internal Revenue Service (IRS) by filing an Internal Revenue Service’s Form 2553filed with the Internal Revenue Service (McQuown, 2004). This form is for electing tax categories. This is a mandatory requirement outlined in the state laws of Mississippi and the federal laws. The regulation as a sole entity that is different from its owners recognizes a Mississippi S Corporation. The S corporation owners enjoy partial liability for the arrears, obligations and liabilities accrued by the entity as well as a liability from possible lawful action. Protection of stakeholder individual assets is a key principle that Mississippi business owners want to incorporate. Usually, owners cannot lose more than the level they brought in the corporation. However, if the corporation is liquidated, the owners will not be liable for debts incurred. In case someone sues the concern and is, liable the courts can use the corporation’s asset to fulfill t he judgment. However, if those assets do not satisfy the judgment, the courts will not be able to take owners’ possessions (McQuown, 2004). There are exceptions to owners’ limited liability to keep in mind. Usually, an exception to an owner’s limited liability occurs when the corporation has irresponsibly laid people or been used to extend fraud (Goldstein & Davidson, 1992). A Mississippi S Corporation does not pay income taxes. Although, an S Corporation that has more than one alien stakeholder files duty returns, the owners must embrace their share of the corporation’s profits or losses on their personal tax returns, as is done in single proprietorship, partnership and by a Limited Liability Company (Goldstein & Davidson, 1992). The tax law gives employees of the corporation the opportunity to enjoy exceptional fringe benefits on a tax-free basis. They can get provided group term life insurance up to $50,000, health insurance coverage, dependent care as sistance up to $5,000, education up to $5,250, adoption aid and more (Goldstein, S. & Davidson, 1992). They can are also covered with medical reimbursement plans. In order to register a business as an S corporation the state of Mississippi requires an Articles of Incorporation or Certificate of Incorporation (Goldstein, S. & Davidson, 1992). Before forming an S corporation in Mississippi, the individuals must file legal documents with Mississippi state authorities so as be allowed to create a Mississippi