Small Business Reading Room

Friday, July 28, 2006

IRS Spring 2006 Statistics of Income Bulletin reveals S corp. trends

Like Data?

The IRS has issued the Spring 2006 issue of the Statistics of Income Bulletin.

The Bulletin includes historical data on income, deductions and tax reported on returns filed by individuals, corporations, s corporations, and unincorporated businesses, with selected data presented for estates. In addition, this issue presents the annual individual income tax return statistics by state for returns filed for Tax Year 2004. Statistics are also presented on tax collections, including excise taxes by type, and refunds for recent years.

Here's some highlights for the most recent data on S corporations:

  • A total of nearly 3.3 million S corporation returns were filed for Tax Year 2003, an increase of 5.9 percent from Tax Year 2002.

  • S corporations continue to be the single most popular corporate entity choice representing 61.9 percent of all corporate entities.

  • The number of shareholders for S corporations increased to nearly 5.8 million, up 2.9 percent from the previous year. Total net income (less deficit) reported by S corporations increased to $213.7 billion for Tax Year 2003 from $183.5 billion reported for Tax Year 2002.

  • Nearly two-thirds, 62.7 percent of all S corporations, reported positive total net income.

  • Total assets increased $169.9 billion to $2,186.6 billion for Tax Year 2003.

  • Less than one quarter of 1.0 percent of all S corporations reported federal tax liability, for a total tax liability of $380.9 million.

You can view the entire Bulletin here:

Spring 2006 issue of the Statistics of Income Bulletin

A wide range of tables, articles, and data that describe and measure elements of the U.S. tax system is available at the Tax Stats Web site.

Wednesday, July 26, 2006

Free Guide to Producing a Business Plan from Ernst & Young

I love free stuff… particularly when it is useful.

Check out this brochure offered at an Ernst & Young website:

Guide to Producing a Business Plan

As the folks over at E&Y point out,
A business plan can be a useful ongoing tool, as it can be used to measure progress as well as to communicate between management, staff and existing investors/bankers. To achieve this it must be kept up to date as the business moves through different stages, from start-up to rapid growth and maturity. A company's strategy must also change along with its objectives.

The free brochure focuses on the necessary steps to produce a business plan for the purposes of raising finance, giving guidance on what to include in, and how to present, the plan. "It also incorporates tips which are derived from Ernst & Young's substantial experience in assisting a wide range of clients to produce business plans for many different reasons."

I found my way to this great resource thanks to a posting from Anthony Cerminaro at BizzBangBuzz.

S Corporations - Their History and Challenges

This is a pretty good summary of where we have been, where we are, and where we want to be...

As recorded from last month's testimony of Thomas M. Sullivan (Chief Counsel for Advocacy U.S. Small Business Administration) to the U.S. House of Representatives Committee on Small Business Subcommittee on Regulatory Reform and Oversight about the history and challenges of S Corporations:

S-corporations were created in 1958. They were developed to enhance entrepreneurial activity and to eliminate the negative effects of double taxation experienced by taxable corporations (C-corporations).(7) C-corporations are subject to double taxation because the corporation itself is liable for income tax on its earnings, then when dividends are distributed to the shareholders the shareholders must pay income tax on those dividends. To receive favorable tax treatment, entities electing S status must adhere to many restrictions, including:

  • the number of shareholders,

  • type of shareholder,

  • class of stock, and;

  • domesticity requirements for S-corporation elections.

In the half century since the creation of S-Corporations, the U.S economy and the world's economies have changed. With the advent of technology, globalization of the economy has become more of a reality.

Policymakers considering changes to tax policy must take a broader view that includes tax policies around the world. To ensure America's entrepreneurs remain competitive, in a global marketplace, we must adopt tax policies that remove barriers to their success.

S-Corporations are a large segment of the U.S. economy. To ensure their continued success H.R. 4421, the "S Corporation Reform Act of 2005," (pdf) was introduced by Congressmen Clay Shaw and Jim Ramstad.

The legislation is intended to reform the provisions that control S-Corporations so that S-Corporations can reach their full potential. H.R. 4421 contains provisions that are advocated and supported by the American Institute of Certified Public Accountants and others.

A note regarding H.R. 4421-

This bill is in the first step in the legislative process. Introduced House Bills go first to House committees that consider whether the Bill should be presented to the House as a whole. The majority of Bills never make it out of committee.

Introduced: Nov 18, 2005
Last Action: Nov 18, 2005: Referred to the House Committee on Ways and Means.

All you S Corp owners may want to contact your congressperson or senator and tell them how you feel about H.R. 4421.

link to Atom Feed




Delaware Intercorp, Inc.
113 Barksdale Professional center
Newark, DE 19711-3258

"For all the best reasons to incorporate,the best place
is Delaware and the best incorporator is
Delaware Intercorp!"

Call Monday - Friday 09:00 (am) - 17:00 (pm) Eastern Time (GMT-05:00)

Toll Free - USA only - 888.324.1817
International: (1) 302.266.9367
FAX: 302.266.9940