S-Corporation Eligibility in Texas
When an individual or group wishes to start a company, they must first consider the type of business formation they wish to pursue. This structure can impact the company’s taxes as well as its legal rights. One of the most popular options is an S-Corporation, or S-corp. However, it is important to know that not everyone is eligible to form and maintain an S-corp in Texas. Fortunately, an experienced business attorney may be able to help you determine your eligibility and begin your business.
Many people wish to form companies as S-corps because of the tax benefits that come with this type of business, but not everyone is qualified to file for this type of business. Eligibility to form an S-corp depends on a number of requirements, including:
- The company must be a domestic corporation or an LLC
- The company cannot exceed 100 shareholders
- The company can only have one stock class
- Most corporations and partnerships cannot be identified as shareholders (some exceptions)
- Income and losses shared equally with partners/owners
If you meet these requirements, you might be eligible to file your taxes as an S-corp, which can be beneficial especially in today’s economy.
Business law can be complex, and forming an S-Corp can sometimes involve a variety of questions and concerns regarding one’s eligibility for this type of business formation. However, a qualified business lawyer of Slater Pugh, Ltd. LLP, might be able to help you navigate the difficulties of forming a new business. Contact us today to learn more about your options.