With a  sub-chapter "S" corporation  you can deduct the profits and losses from your corporation on your personal tax return. You will no longer be considered a "C" Corporation. Prior to March 15 you will file an IRS Form 1120-S with the IRS.

You MUST elect to be a sub-chapter "S" corporation by filing the IRS Form 2553. It has nothing to do with the state where you incorporate, but refers to the way you pay your income tax.

Upon approval by the IRS for this status, you can pass early losses through to the shareholders giving you and your investor a tax write-off against ordinary income, up to the actual amount of money they have invested in the company. Once the corporation turns a profit, the Sub-Chapter "S" status eliminates taxation for the company entirely. The tax liability is passed on to the stockholders.

To be incorporated the name of the corporation must include one of the following:

• Incorporated or Inc.
• Corporation or Corp.
• Association
• Institute
• Union
• Limited or Ltd.
• Club
• Foundation
• Fund
• Society
• Syndicate

For more detailed information on an "S" corporation click here.

Note:  You cannot be filed as an "S" Corporation. That is an IRS designation and  only has to do with the way you pay income tax on the profits and losses.