July 1, 2025
For small and medium-sized businesses across the United States, the federal S corporation election represents a cornerstone of tax-efficient structuring. Its primary allure lies in the principle of pass-through taxation, a mechanism that elegantly avoids the double taxation inherent in the traditional C corporation framework. However, for entrepreneurs operating within the five boroughs of New York City, this federal advantage collides with a uniquely challenging local tax regime. The result is a profound paradox, where a structure designed for tax simplicity becomes a source of significant financial and administrative complexity.
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