sponsored by BUSINESS TIP Many private business owners elect to incorporate, turning their companies into C corporations. But, at some point, you may con- sider converting to an S corpora- tion. This isn’t necessarily a bad idea, but it’s important to know the ramifications involved. Similarities and differences S and C corporations use many of the same recordkeeping practic- es. Both types of entities maintain books, records and bank accounts separate from those of their own- ers. They also follow state rules regarding annual directors' meet- ings, fees and administrative filings. And both must pay and withhold payroll taxes for working owners who are active in the business. There are, however, a few impor- tant distinctions. First, S corpora- tions don’t incur corporate-level tax, so they don’t report federal (and possibly state) income tax expenses on their income state- ments. Also, S corporations gener- ally don’t report prepaid income taxes, income taxes payable, or deferred income tax assets and liabilities on their balance sheets. Should you convert from a C corporation to an S corporation? Contributed by the Ceramic Tile Distributors Association 24 TileLetter | November 2017