Upon filing the Articles of Incorporation with the secretary of state, an S-Corporation becomes an official for-profit corporation. All taxable income produced by a for-profit corporation (also known as a ‘C corporation’) must be reported by the Corporation.
Once a corporation has been formed, it may elect “S-Corporation Status” by filing IRS form 2553 with the Internal Revenue Service. Upon filing this document, a corporation is taxed like a partnership or sole proprietorship, rather than as a separate entity. By electing an “S Corporation Status” all income is absorbed by the shareholders for purposes of computing tax liability. Therefore, the profits or losses of an S Corporation are reflected on the individual shareholder’s tax returns.
An S-Corporation is ideal for the individual who prefers the limited liability of a corporation and the tax benefits of a partnership.
The How to Start a Business in Oregon, provided by the Oregon Secretary of State, itemizes the basic considerations and requirements for starting a business in Oregon.