Legal Question in Business Law in New York

S-corp status is found at both the state and the federal level. A corp must become a federal S-corp either concurrently with or just before becoming a NYS S-corp. NYC has nothing to do with S-corp status.

The restrictions on S-corps are pretty easy for small businesses to fulfill; the S-corp must have fewer than 75 shareholders, and all of those shareholders have to be human beings. I believe there's a money limit on S-corps, too, but it's in the $millions which is rarely a problem for a small business just starting out.

You should the proper paperwork with the IRS and the NY State Dept. of Tax and Finance simultaneously; it costs nothing to file this paperwork and only rarely does the filing create any difficulties.

You might want to take a look at the information on S-corps at www.irs.gov (the IRS website) and www.tax.ny.gov (the NY Dept. of Tax & Finance website).

Good luck!

THIS POST CONTAINS GENERAL INFORMATION AND IS INTENDED FOR ENTERTAINMENT PURPOSES ONLY. IT DOES NOT CONSTITUTE LEGAL ADVICE, NOR DOES IT CREATE ANY ATTORNEY-CLIENT RELATIONSHIP. FOR LEGAL ADVICE ON YOUR PARTICULAR MATTER, CONSULT YOUR ATTORNEY.

As a Franchise Attorney I can only add the following. You should check with your tax professional about the benefits and limitations of an s-corp. For example, an s-corp can only elect the standard calendar year end, as opposed to a fiscal year end. Having a fiscal year end can be very advantageous in certain situations. Consult with a good tax professional or franchise attorney in your area for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Foundations, a Professional Corporation