Corporate election

3. Corporate election to amortize start up business expenses and organizational business expenses (continues...)

What are organizational business expenses?

Organizational business expenses are the costs of organizing a business. Organizational business expenses include the cash outlays for legal fees and business entity set up fees.

What are start up business expenses?

Start up business expenses are amounts incurred from pre opening business expenses, initial legal services, organizational meetings, initial fees paid to state and local agencies and other similar expenses.

A corporate election with regards to amortization of start up business expenses and organizational business expenses is made with he first return to amortize the business expenses ratably over 60 months, starting the first day that the C corporation is actively engaged in business.

4. S corporation corporate election

Whether or not your C corporation should make an S corporation corporate election depends on your tax strategies. Sometimes, making corporate election of S corporation has more tax benefits. Sometimes, remaining a C corporation is better. Whatever you decide for your C corporation, you have a limited time to make the corporate election.

How to make S corporation election?

In order to make an S corporation corporate election, you need to file a statement with the IRS within the first two and a half months of operation of your C corporation. The statement filed with the IRS needs to be signed by all shareholders and their spouses if they reside in community property state. Sometimes an extension for S corporation election can be obtained from the IRS.