Tax Treatment of S Corporations in Minnesota
Minnesota recognizes S corporations as defined by the IRS. S corporations do not pay the state’s 9.8% corporate tax rate on revenue. The minimum fee tax applies based on property, payroll, and sales totals.
Examples of S Corporations
Jack’s, Inc. is an S corporation in Florida. Robert and Brenda are shareholders. In 2015, its profits were $20 million. Robert and Brenda will each report income accordingly.
Advantages and Limitations of S-Corp in Minnesota
Shareholders enjoy liability protection with a Minnesota S corporation. Income, deductions and credits flow through to them annually, avoiding double taxation. Some states do not recognize S corps. Others recognize them in a limited way. These states tax S corps like C corps.
Starting an S-Corp in Tennessee
To set up an S corp in Tennessee, incorporate first. Elect S status with the IRS. File with the Secretary of State. An LLC can instead elect partnership tax treatment.
Business Ownership Options
S corporations themselves can invest. They can buy stock or mutual funds. Business ownership options include: sole proprietorship, partnership, C corporation, S corporation, and LLC.
Corporate Requirements
Corporations need a registered agent for annual reports. Banks and insurance companies cannot be S corps. Corporation size also matters. C corps better suit large companies with many shareholders.