S-Corporation

S corporation is very popular among solopreneurs and professionals. Most business owners sort of “graduate” from an LLC to an S corp over a period of time. In this guide, we will understand what exactly an S-Corp is and its benefits At the end of this guide, you’ll be able to decide whether an S-Corp is right for you or not. Let’s dive right in.

S-Corporation, aka S subchapter is a tax classification made by companies that allow income & losses to be passed through to the shareholders. It is a tax classification and not a new business entity. It is just an election that can be made by one of the existing business entities: LLC, C corporation or partnership. If you meet the requirements set by the IRS and file Form 2553, your business entity can be elected as an S-corp. It is sort of like a combination of partnership and a corporation: it has flow through income like a partnership and hires shareholders as employees like a corporation.

Corporation income tax return

The Income Tax Department has prescribed two ITR forms for filing of income tax return of a sole proprietor. These are as below: ITR-3: ITR-3 is the ITR form prescribed for the taxpayers engaged in the business or profession. In ITR-3, the details of the Balance Sheet and Profit & Loss A/c of the taxpayer are also required to be filled. ITR-4: ITR-4 form is prescribed for those taxpayers who want to choose the presumptive income scheme as per sections 44AD, 44ADA, and 44AE. The Presumptive Income Scheme is a simple tax scheme prescribed by the IT department for the small traders which saves them from the cost & time involved in maintaining books of accounts.

Income Tax Return Filing Proprietorship Firm

All resident corporations (except tax-exempt Crown corporations, Hutterite colonies and registered charities) have to file a corporation income tax (T2) return every tax year even if there is no tax payable. This includes:

non-profit organizations

tax-exempt corporations

inactive corporations

SPECIAL RULES FOR FOREIGN INVESTORS

The Income Tax Department has prescribed two ITR forms for filing of income tax return of a sole proprietor. These are as below: ITR-3: ITR-3 is the ITR form prescribed for the taxpayers engaged in the business or profession. In ITR-3, the details of the Balance Sheet and Profit & Loss A/c of the taxpayer are also required to be filled. ITR-4: ITR-4 form is prescribed for those taxpayers who want to choose the presumptive income scheme as per sections 44AD, 44ADA, and 44AE. The Presumptive Income Scheme is a simple tax scheme prescribed by the IT department for the small traders which saves them from the cost & time involved in maintaining books of accounts.