I am a law school graduate. What I offer is mere information, not to be construed as forming an attorney client relationship.
Here is some general info: losses can be passed on to individual shareholders but with worker's comp -- i am not sure. Read what is printed below and then try contacting your local city hall and see if they have literature or your state bar.
The corporation will be taxed unless you file a form declaring S Corporation status. Once you file that form, corporate profits will be passed through to the owners who will pay income tax on those profits.
WHAT ARE S CORPORATIONS?
An S Corporation ("S Corp.") is an ordinary business corporation that has elected to be taxed under Subchapter C of the Internal Revenue Code. It is not taxed on its earnings as a corporation, but instead its earnings are passed through to its shareholders for tax purposes.
However, an S Corp. has certain limits on the number of shareholders it may have and who may be shareholders,is limited to one class of stock and has to operate under a group of other rules.
S Corps have the following advantages:
Losses can be passed on to the investors,
Two levels of taxation can often be avoided,
There are no accumulated earnings tax, and
There is limited liability protection.
Conversely, the S Corp. suffers from the following drawbacks:
At-risk limitation, basis limitation on losses, passive loss limitations and investment interest limitations are all in effect,
Individual alternative minimum tax consequences may arise, and
The S Corp. may not be brought forward in a public offering to raise capital
