A Michigan S-corporation is a standard corporation that has elected for the special S-corp tax status with the IRS. The election is done by filing Form 2553 with the Internal Revenue Service. Withholding on flow-through entity members: A flow-through entity with business activity in Michigan that reasonably expects to accrue more than $200,000 in apportioned or allocated business income for the tax year must also withhold on the distributive share of each member that is a flow-through entity. Every FTE in Michigan must withhold on every member that is a nonresident individual.
Tax Rates and Obligations in Different Regions
Alberta’s small business tax rate is 2%. The corporate tax rate in California is a flat 8.84% on net taxable income from business activity.
Flow-through entities pay no CIT, and income passes through to the owners’ personal income tax (PIT) return. Michigan’s current PIT rate is 4.25%. Corporations with less than $350,000 of apportioned gross receipts or less than $100 in liability are not required to file or pay the CIT.
Forming an S-Corp in Michigan
To create an S-Corp in Michigan, follow guidelines that include:
- Forming a business name
- Hiring a Resident Agent
- Filing your Articles of Organization
- Creating an operating agreement
- Requesting an EIN
- Filing a form 2553
All business owners of limited liability companies (LLC) and corporations must file an annual report to ensure the state’s records are accurate. Michigan has specific due dates for filing annual reports. Submitting annual reports keeps entities in good standing.
Goods subject to sales tax in Michigan include physical property, like furniture, home appliances, and motor vehicles.
The State of Michigan recognizes a properly filed Federal tax extension. An individual S corporation shareholder will owe tax on his or her share of the company’s income at a rate of 4.25%.
Filing Tax Returns for S-Corps
Does an S corp have to file a tax return in Michigan?
Yes, a Michigan S-corporation must file a tax return. The corporation is a standard corporation that has elected the S-corp status with the IRS by filing Form 2553. Flow-through entities with substantial business income must also withhold on the distributive share of each member.
Are S Corps required to file a tax return?
Yes, S corporations are required to file a tax return, as they are standard corporations that have made a specific election with the IRS.