Title: Texas Sample Letter regarding Articles of Incorporation — Election of Sub-S Status Introduction: Incorporating a business in Texas offers multiple benefits, and one key aspect is the ability to elect Subchapter S (Sub-S) status for tax purposes. To aid you in this process, we have prepared a comprehensive sample letter regarding the Articles of Incorporation — Election of Sub-S Status tailored specifically for Texas businesses. This letter addresses the necessary steps to elect Sub-S status, ensuring your business gains the tax advantages associated with this election. Content: 1. Importance of Sub-S Status Election: — Overview of Sub-S status importance for small businesses in avoiding double taxation. 2. Introduction to the Sample Letter: — Explanation of the purpose and contents of the sample letter to guide businesses during the process. 3. Names and Types of Texas Sample Letters regarding Articles of Incorporation — Election of Sub-S Status— - Standard Texas Sample Letter regarding Articles of Incorporation — Election of Sub-S Status: A generic letter suited for most Texas businesses opting for Sub-S status. — Texas Sample Letter regarding Articles of Incorporation — Election of Sub-S Status for Professional Service Corporations: A specialized letter tailored to professional service corporations (e.g., healthcare, law, accounting) outlining unique considerations and requirements. 4. Addressing the Texas Secretary of State: — Guidance on addressing the letter to the appropriate office responsible for processing Articles of Incorporation in Texas. 5. Required Information: — Detailed description of the information to be included, such as the company's legal name, principle place of business, effective date of the Sub-S election, and more. 6. Supporting Documents: — Explanation of the additional documents that should accompany the letter, such as Form 2553 (Election by a Small Business Corporation), copies of relevant resolutions, and any required fees. 7. Compliance with Texas State Laws: — Emphasis on the importance of compliance with Texas laws and regulations while making the Sub-S election. 8. Deadline and Delivery: — Guidance on the deadline for submitting the Sample Letter and guidelines on the delivery options, such as registered mail or in-person submission. 9. Confirmation and Record Keeping: — Recommendations on retaining a copy of the letter, related documents, and proof of delivery for future audit or reference purposes. 10. Consultation with a Legal Professional or Tax Advisor: — Encouragement to consult with competent legal or tax advisors who can provide personalized guidance based on individual circumstances and ensure compliance with all legal requirements. Conclusion: By utilizing the Texas Sample Letter regarding Articles of Incorporation — Election of Sub-S Status, businesses can effectively elect Sub-S status, availing themselves of significant tax advantages. Remember, it is crucial to consult professionals to ensure compliance with Texas regulations and to fully understand the implications of this election for your specific business.
Texas Sample Letter regarding Articles of Incorporation - Election of Sub-S Status
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How to fill out Texas Sample Letter Regarding Articles Of Incorporation - Election Of Sub-S Status?
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LLC members are subject to the 15.3% combined self-employment tax (12.4% for social security and 2.9% for Medicare). A benefit of doing business in Texas is that there's no state income tax for individuals or corporations. Also, while Texas has an annual franchise tax, most LLCs won't need to pay anything.
Who can own an s corp? An S corp can be owned by any U.S. citizen or U.S. resident. The law requires all owners to be individuals and caps the maximum number of owners at 100.
Once you confirm you meet the requirements, you may apply for S Corporation status with the IRS by filing Form 2553. The State of Texas recognizes the federal S Corp election. Your business will still be subject to franchise taxes with the State of Texas.
Texas S-Corp Filing Service is one-time $375 and includes: *Receive employer identification number.
Although S corporations generally aren't subject to tax, those formerly C corporations are taxed on built-in gains (such as appreciated property) that the C corporation has when the S election becomes effective, if those gains are recognized within five years after the corporation becomes an S corporation.
LLCs can have an unlimited number of members; S corps can have no more than 100 shareholders (owners). Non-U.S. citizens/residents can be members of LLCs; S corps may not have non-U.S. citizens/residents as shareholders. S corporations cannot be owned by corporations, LLCs, partnerships or many trusts.
Advantages. Limited liability: Company directors, officers, shareholders, and employees are given personal liability protection through an s corp. Pass-through taxation: All owners report their share of profit and loss on their individual tax returns. This is then only taxed at the personal level, similar to an LLC.
If there will be multiple people involved in running the company, an S-Corp would be better than an LLC since there would be oversight via the board of directors. Also, members can be employees, and an S-Corp allows the members to receive cash dividends from company profits, which can be a great employee perk.
