What is an S-Corp?
S-Corporations (or S-Corps) are special types of corporations that, for federal tax purposes, choose to pass corporate income, losses, deductions, and credits through to their shareholders. The shareholders report the flow-through of income and losses on their personal federal tax returns and are taxed at their individual income tax rates. This allows S corps to avoid double taxation — the business is essentially not taxed.
Is my company an S-Corp?
To qualify for S Corp status, your company must meet a few requirements and submit a specific form (Form 2553) signed by all the company’s shareholders. Read more about the requirements to become an S-Corp here.
If my company is an S-Corp, what do I need to do?
Tell us! If you haven’t already, you can let us know which members are shareholders that have greater than 2% interest in the company by following the steps below:
- Under Manage, go to Employees.
- Select the employee that’s a >2% S-Corp shareholder.
- Go to Personal information.
- Update their S-Corp status.
You can use the Company Census in Reports to see who you’ve already reported.
If any of those shareholders have medical, dental, or vision premiums paid for by the company outside of Justworks, we’ll need to know the amounts paid on their behalf. We only need to know the amounts the employer contributions paid for those shareholders during your company’s time on Justworks. You can enter the amounts on the End of Year Tasks page. You won’t need to enter any premiums paid by the company for benefits being offered through Justworks - we’ll handle that automatically for you!
Lastly, if your company has an employer-paid life insurance policy that covers greater than 2% shareholders, please use the Fringe Benefit tool to report the premiums.
Please complete the above tasks by December 18th, 2020.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.