Question

During the formation of a business, it is decided that an S-Corporation will be used. Of the following choices, which are key considerations that would make an S-Corporation more appropriate than other forms of businesses?

Answer 1

Answer:

Protected assets:.

Pass-through taxation:

Tax-favorable characterization of income:

Straightforward transfer of ownership:

Cash method of accounting

Heightened Credibility:

Explanation:

The advantage S-Corporation have over all other forms of businesses is as follows:

Protected assets:. An S corporation protects the personal assets of its shareholders.

Pass-through taxation:An S corporation does not pay federal taxes at the corporate level. It is of benefit to businesses starting from inception

Tax-favorable characterization of income:S corporation shareholders can be employees and be paid as employees. They can also receive dividends from the corporation and distributions that are tax-free to the magnitude of their investment in the corporation

Seemless transfer of ownership: Ownership can be freely transferred to people legally

Cash method of accounting: They don't have to use the accrual method of accounting while other Corporations use that(except for small businesses)

Heightened Credibility: It helps to establish a strong credibility with business partners, employees, vendors