As you begin to create a new business entity, you will find there are several aspects to consider. The type of business must be chosen in order for the proper protocols to be followed, including obtaining an EIN number. An S-Corporation is a business entity that is comprised of a single person or several people, an entity that has filed articles of incorporation. This type of entity can apply to a business where no partnerships are involved or certain trusts or estates. Learning how to get an EIN for a trust or other S-Corp types through IRS-EIN-Tax-ID, will help you to get the ball rolling for your tax as well as business filing needs.
Benefits of an S-Corporation
There are several benefits to filing your entity as an S-corporation. One main benefit is that employees of the company are able to avoid double taxation. A traditional corporation will have to pay corporate as well as income taxes on shareholder dividends.
With an S-Corporation, the entity is electing to pass corporate losses, income, credits and deductions to the shareholders and not the corporation. The shareholders are then the ones who must provide reports involving losses and income via personal tax filing.
Specific Requirements for an S-Corp
There are specific requirements that must be met in order for an entity to qualify as an S-Corp. This includes being a domestic corporation, no partnerships or non-resident alien shareholders, only have one class of stock and can apply to individuals, estates or trusts.
An EIN number for an estate, trust, the business, etc. will be a nine-digit number that is used by the IRS to determine tax requirements. The number is also important for financial needs. A financial institution will require the EIN number in order to offer a loan or for a business account to be opened for banking needs.