Illinois S corporations are for those who want the limited liability and the more formal structure of a corporation but with pass-through taxation of the business profits. A Illinois S corporation is simply a standard corporation that becomes an S corporation when its shareholders elect special tax status with the Internal Revenue Service (IRS) by filing an IRS Form 2553 (after filing its official documents with State).
Like Illinois C corporations, an S corporation is recognized by the law as an individual entity, separate from its shareholders (owners), many times treated as a human being. Illinois S corporation shareholders enjoy limited liability for the debts, obligations and liabilities incurred by the business as well as liability stemming from possible legal action.
Normally, shareholders cannot lose more than the amount they invested in the corporation. If the corporation goes bankrupt, the shareholders will not be liable for its debts. Should someone sue the corporation and the corporation is found liable, they can take the corporation’s property to satisfy the judgment. But if that property still does not satisfy the judgment, incorporating as an S corp will ensure that they will not be able to take a shareholder’s personal assets (i.e. home, car, or bank account).
There are exceptions to shareholders’ limited liability to keep in mind. For example, one exception to a shareholder's limited liability occurs when the corporation has recklessly harmed people or has been used to perpetuate fraud.
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Unlike C corporations, a Illinois S corporation does not itself pay any income taxes. While an S corporation with more than one shareholder does file tax returns, the individual shareholders (owners) must include their share of the corporation’s income or loss on their personal tax returns, just as is done in sole proprietorships, partnerships and Limited Liability Companies (LLCs).
To qualify as an S corporation in Illinois, an IRS Form 2553 must be filed with the Internal Revenue Service. In very few states, you will also be required to file a separate state election, as specified by that state, in order to qualify as a Sub S Corporation. Only Arkansas, New Jersey, New York, Ohio and Wisconsin require state level filing in addition to IRS filing.
MaxFilings can help you with filing the IRS Form 2553 by preparing the form and sending it to you with instructions for completion and filing with the IRS.
Important Points to Consider When Forming a Illinois S Corporation
Owners & Employees
Here’s an overview of the 10 steps to forming a corporation with MaxFilings:
MaxFilings helps you get organized and you set the pace – you can save all your incorporation information in one handy spot online and make changes anytime until you’re ready…or you can order online right now to take advantage of the following benefits:
Competitive & Transparent Pricing. There’s never any obligation to order and there’s no charge for saving your information – you only pay your incorporation fees when you’re ready to order. Our competitive pricing includes all state fees and other charges so you’ll have no surprises later.
Convenience & Ease of Use. MaxFilings helps you get organized in an orderly way and you set the pace – you can save all your incorporation information in one handy spot online and make changes anytime until you’re ready to incorporate…or you can order your incorporation online right now!
Secure & Confidential. As a MaxFilings user, you can rest easy knowing that all your information is completely safe. We use industry-recognized security safeguards for storing and processing your orders, ensuring stringent data security for as long as you want to keep it with us.
Partner Perks. As you incorporate in State, you need to think about growing and promoting your new corporation. MaxFilings’ online promotions partner SEO Advantage offers you expert services in PR, web development, search engine marketing, website optimization and graphic design.
Best of all, your satisfaction is 100% guaranteed!
If you’re ready to form a Illinois corporation, start entering your information now. You’re under no obligation, and there is no charge until you actually place your order.
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