Massachusetts Recognition of S Corporations
Massachusetts recognizes S Corporations and allows for their flow-through taxation. However, it also has a distinct “stinger tax” on owners of S Corporations.
- Businesses that report less than $6 million in revenue have no additional tax.
- Those reporting between $6 million and $9 million must pay another 2 percent on those earnings.
- Those who report more than $9 million must pay an additional 3 percent.
S Corporation in Massachusetts
Entities that are S corporations for federal purposes are S corporations for Massachusetts purposes, with the exception of security corporations. An S corporation’s income, losses, and deductions are passed through to the shareholders, and are reported and taxed on the shareholders’ individual returns.
Operating an S Corporation Online in Massachusetts
Yes, an S Corporation can be operated online in Massachusetts, with proper registration and compliance with relevant regulations. You are not required to appoint a board of directors when starting an S Corporation in Massachusetts. You can convert an existing business to an S Corporation in Massachusetts.
Shareholder’s Responsibility
The shareholders of the corporation have a financial investment in the corporation. To protect their interests, the shareholders elect the board of directors. The President has the overall executive responsibility for the management of the corporation and is directly responsible for carrying out the orders of the board of directors.
Filing Requirements for S Corporation
S Corporation needs to file Form 1120-S to report the income, gains, losses, deductions, credits, etc. The following taxpayers are not allowed to own shares in an S corporation: Entities that are S corporations for federal purposes are S corporations for Massachusetts purposes, with the exception of security corporations.