Small business and their share holders get special treatment regarding taxes with the help of S Corporation. So S corporation is an elective provision for special income tax treatment. In S corporation you can claim your loss while filing any tax return. You will get rebate on in the taxes. So you are always given a option to compensate your extra income. You have to fulfill several requirements of IRS to become a S corporation or Small Business Corporation.

To retain the S corporation status or to have a S corporation the corporation has to fill IRS Form 2553 with IRS. Once the corporation is the calendar-year tax payer then it has to fill the form by March 15. Then only this election will have value in the current tax year. For example in Florida, the election should be held within seventy five days of the start of the corporation otherwise they will be treated as C Corporation in the first year and then from the next year it will file be treated as S Corporation.

Before 1997 the member was limited to 35 but now the S corporation can have maximum of 75 shareholders. The share holders must be unique i.e. the married couple is counted as one. In S Corporation the shareholders can be individuals, trust and certain estate. For Florida S Corporation the shareholders must be a citizen or at least the resident of United States. Only one class of stock exists in S corporation but there is some exceptions like the voting and nonvoting shares are not considered as separate class. Preferred stocks are not allowed in S Corporation. Unless and until the dept is classified as equity it will not be considered as second class.

The requirements for debt to get accepted as subchapter in S election are as follows

1. There must be individual creditor.

2. The debt interest must not be tied to Profits

3. The debt should not be a converting one.

The S Corporation is always a domestic corporation. For example the Florida S Corporations are bound to follow the laws of United States and other local state laws. Before 1997 there was no provision for subsidiaries in S Corporation for which they get the membership of affiliated group of corporations. But after 1997, the corporation can have qualifying subsidiaries. Even they can have 80 per cent or more of the stock of a C corporation. The S corporation can’t join the election of filing of a consolidated return with its affiliated S corporations. The calendar year is always considered as the fiscal year unless and until it can show the IRS that the next fiscal year will satisfy their business purpose.

Beside S corporation there are also many other corporations. Like in Florida the different corporations are LLC Florida, File Florida Corporation and C Corporations. The basic law is same for all the corporations. In United States the oldest corporation is Harvard Corporation which was designed in 1650 to look after the business in Harvard University.