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Costly Mistake #11: Losing S corporation status.
Electing "S Corporation Status" with the IRS allows small business owners to avoid being doubly taxed on profits earned by the corporation. The most common way of losing this preferred tax status is by failing to make the election in the first place. This election must be made with the IRS following your incorporation on the state level. Certain restrictions apply to corporations that wish to make the "S" election. This is a very complex area of the law, for more information regarding the "S" election; you should consult a tax professional. Failure to comply with IRS rules could lead to the loss of this election and to large tax liabilities and penalties.
