(there’s so much conflicting info about this online 😱 I know the community can get to the bottom of it.)
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Some of the benefits compared to a sole proprietorship are that you can have shareholders, the company doesn’t rest solely in your hands, the company exists after you retire / die, and you’ll have an easier time getting loans and funding. I assume you mean in the US? I only know US laws and FASB / GAAP.. no clue on what the differences are in other countries and IASB
The biggest benefit of an S-Corp is liability protection. The S-Corp is a legal entity and is responsible for legal and financial liabilities. You think your company will grow huge and be the next big thing after making 100k in profits the first year, so you take out loans as the company, not personal loans. Then something happens to tank your business. Or your product suddenly has an issue causing injury or damage to other people, and has lawsuits against it. In both cases as an S-Corp, you file for bankruptcy and dissolve the business and problem solved, you personally don’t owe anything. If that was a sole proprietorship, you personally are still on the hook financially for that.
There are other benefits like better tax rates as a corporation and the ability to provide certain benefits that a non-corporation couldn’t.
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