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Why they shouldn't be an S-Corp:In order to start their business, they got a business loan, along with some money from their parents. Then, they went and met with your local CPA firm (like they thought they should) discover what was next. The gist next was shocking these people.the CPA firm told them they should become an S-Corp, due to all the wonderful benefits they'd get. Now, mind you, this was before they can had roughly customer! In fact, this was OVER a few months before they finally had their first customer.