You’ve “been sold” that a Corporation or LLC is needed to get those tax benefits. No you don’t because there’s something else – a Business Trust Company.
The Business Trust doesn’t need to register with the Secretary of State. That means no annual fees, no franchise taxes, no delays and no public disclosures. You can still get limited liability and asset protection. It’s unlisted so nobody can look up your private business online.
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What is a Business Organization?
A business organization is formed by an individual or a group of individuals. These organizations include:
- Corporations
- LLCs
- Business Trusts
Corporations and LLCs require Secretary of State registration, filing fees, franchise taxes, and resident agents. You can easily find any Corp or LLC on a google search.
Business Trusts can operate without Secretary of State obligations or expenses. And you’ll never find them on a google search because they’re unlisted.
What’s this “S” All About?
This refers to 26 US Code Subchapter S of the Internal Revenue Code.
Each one of the business organizations mentioned above can ‘elect’ to have “Subchapter S” income tax classification.
Once your business organization is setup then you file IRS Form 2553 – to positively affirm your “S” election preference.
Annually you file two forms:
Form 1120S – business information return
Form 1040 – individual tax return
* for a Corporation electing S Classification you will hear them referred to as “S Corps” but realize they are actually two components spoken as a single term. This verbiage is what confuses people.
What to do next?
If you have decided that you want “Subchapter S” income tax classification and benefits, then it’s time to choose your business organizational type. Explore the pros/cons of each type below…
| Requirement | Inc | LLC | Business Trust |
|---|---|---|---|
| Secretary of State Registration & Fees | YES | YES | NO |
| Annual Franchise Taxes | YES | YES | NO |
| Subchapter ‘S’ Classification | YES | YES | YES |
| Corporate Veil | YES | YES | NO |
| Corporate Transparency Act | YES | YES | NO |
| Google Searchable | YES | YES | NO |
So ask yourself, if there’s something easier and more private than a Corporation or LLC that offers me S-Corp tax benefits then what am I waiting for?
Would You Like To Learn More About “S” Income Tax Benefits with a Business Trust?
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