The “S Corporation” has been popular with business owners since its inception back in 1958 to present day. Each year, there are over 4.5 million tax returns filed by S corporations, which is more than any other business entity. Why is the S corporation election so popular? First, the S election provides an entity, whether a corporation or limited liability company, the opportunity to gain “flow through” treatment for income tax purposes. This means that instead of taxing income at the entity level, all income flows through to be taxed at the owner’s level. Second, there are certain employment tax …
Supreme Court Decides Religious Discrimination in Employment Case
An employer cannot refuse to hire an individual because of a religious practice that the employer could reasonably accommodate without hardship. In EEOC v. Abercrombie & Fitch Stores, Inc., the Supreme Court addressed the issue of whether an employer must have actual knowledge of the need for an accommodation. Abercrombie & Fitch Stores, Inc. (“Abercrombie”), a clothing store, requires all store employees to comply with a dress code policy that includes a prohibition on wearing informal “caps.” Samantha Elauf was unaware of the dress code policy when she applied and interviewed for a sales position. At the interview she wore …
S corporations offer tax advantages
Readers who are partners in an incorporated business may have heard of “S corporations” and that they enjoy a unique tax structure. The Small Business Administration has a lot of good information about S corporations, which we will summarize here. Also known as an S corp, an S corporation is a type of business organization in which profits and losses flow directly to the shareholders. This allows the business to avoid paying taxes; instead, the shareholders take care of it through their own personal income tax returns. This is similar to general partnerships, as we discussed in our previous post. …