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The recent changes that favor S Corporation [SC for short henceforth], give you this hard to ignore opportunity to re-examine your business in order to take advantage of the wherewithal of corporate rewards, especially in handling your tax liabilities. While also enjoying limited liability without tax, which other corporate entities are benefiting under the law, SC has comparative advantages that are much more attractive to entrepreneurs.

Think about it for a moment. In so far as maximizing the benefits of tax liability is concerned, the pot of gold even waits at the end of the rainbow so to speak, if you decide to turn from SC to LLC [a limited liability company]. But at this juncture, this declaration is premature if not as confusing as putting the horse before the cart. There is also an important caveat that should neither be ignored nor taken for granted if you decide for LLC conversion [infra].

First, let us establish those factual developments with nary a doubt.
Theoretically, those recent favorable changes are more real than just apparent. Rigid rules have become flexible. Shareholder membership has been extended to not more than 100. Eligibility had been redefined to include limited liability companies, and tax-exempt corporations [501(c)(3)] can now be shareholders.

SC shareholders must file Form 2523 on time as prescribed in the form. However, IRS is now lenient in accepting late S election.

Second, in terms of extension and expansion of business operations, SC can either have SC or C corporations as subsidiaries.

Third, not too long ago such wider latitude of options was what made SC a topmost choice of investors in putting up pliable business concerns. It is still now, especially when the country's business cycle is favorable, and the economy is healthier after bouncing back from recession.

Since the Small Business Job Protection Act of 1996 was passed into law, implementing rules and regulations benefited more than two million S Corporations all over the country. Their advantages over traditional corporations are in this commonly discussed pass-through limited tax liability. To attract businesses for increased tax revenues more especially needed in urban development, states passed legislations creating LLCs on top of other legislated tax incentives programs intended to benefit the business community.

But before you choose to be an LLC, as SC you already have a great advantage over ordinary taxpaying entities. Losses [except when there is a passive loss

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