How to form an S-corporation for Medical supplies


If you’re a small business owner, it’s likely that your company has done well. As such, you might be considering growing your company through a merger or acquisition. When this happens, you can choose to incorporate as an S corporation. This type of incorporation allows for the protection of personal assets while providing some tax benefits. In this article we’ll discuss what an S corporation is, why it’s beneficial and how to form one.

Definition of an S Corporation

An S Corporation is a corporation that, unlike a standard corporation, has income taxed only once. The IRS refers to this as a pass-through entity because the income and expenses are passed through directly onto the owners’ personal tax returns.

An S Corporation differs from a regular (C) corporation in several important ways

  • The shareholders of an S Corporation must be U.S. citizens or residents who have been issued Social Security numbers
  • There are no limits on shareholder’s equity
  • Distributions can be made to shareholder’s capital accounts or as dividends paid out of after-tax profits

Benefits of S Corporations

S corporations are generally exempt from federal income tax. The corporation itself does not pay tax, but rather its shareholders must report their share of the corporation’s income on their own tax returns and pay taxes at their individual tax rate.

In contrast to C-corporations that can distribute taxable dividends to shareholders, S corporations do not pay dividends to shareholders. Instead, S corporations may only pass through tax-free profits or losses to its shareholders. Therefore, an S corporation does not have a corporate level taxable entity; however, if the owners do not claim all of the profits as salaries or wages then the remaining balance will be taxed at the personal level when passed through to them in the form of dividends and capital gains distributions (if applicable).

Unlike C corporations where fringe benefits provided by employers are subject to taxation as compensation; non-cash fringe benefits offered by S corporations are generally excluded from taxation as long as they meet certain requirements set forth under Internal Revenue Code Section 132(a)(4).

How to Form an S Corporation

There are three steps to forming an S corporation:

Create a business plan

The first step of the process is to create a business plan that identifies how you will run your new company, how much you expect to earn in profits, and how much money you want to keep as profit. You’ll also need to include details about what your company will do for medical supplies, who will be working with them, and whether or not there’s any competition in the area.

Apply for EIN 

In order get an EIN number from the IRS, which is required when applying for incorporation status with any state agency or secretary of state office tasked with registering corporations within their jurisdiction. You can also apply online and this should take around 5 minutes–just make sure that if there’s anything else needed during this time period (such as checking information against other databases), it won’t require additional fees beyond purchasing the actual documentation itself!

Contacting a tax professional or attorney

There are many benefits to forming an S corporation, but it’s important to understand the process and potential risks. You can find more information on these topics by contacting a tax professional or attorney for help with any questions you may have about forming an S corporation.

If you don’t have time to do the paperwork yourself or if you would rather have someone else handle it for you, we are here to provide you with that help. Just hit up the Trademark Avenue website and pull of your burdens!

Want to create a company and take advantage of the tax benefits? Form an S Corporation

An S corporation is a business entity that has elected to be treated as a corporation under subchapter S of the Internal Revenue Code. An S corporation has the same legal and tax characteristics as other corporations, but they pass through their income and losses to their shareholders. Shareholders report the income or deductions on their personal returns and are not subject to self-employment taxes on those amounts.


Forming an S corporation is a great way for small businesses to pay less in taxes and enjoy other benefits. If you’re looking for more information about how to form an S corporation, contact a tax professional or attorney.

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