C Corporations have been the most common form of doing business, epically big business, and companies seeking public financing. The benefits include limited liability for shareholders, a structure created for raising large amounts sums of capital, and the ability to take advantage of special tax strategies in areas including group insurance (life and health), pension/profit-sharing plans and many others fringe benefits.
C Corporation are taxed at the corporate level. This means all income passed on to shareholders has already been taxes as profit. Creating a situation of double taxation for shareholders/owners.
Note: amounts paid to directors, officers, and employees as salaries and bonuses are generally deductible pre-tax expenses.
Recommended in situations
- Where shareholders and officers / employees are not the same parties.
- Where the business plans to raise large amount of money from unrelated sources.
Not recommended for the following situations:
- Where entity management and maintenance expenses are a concern
- Where another entity type will meet your asset protection, tax minimization needs.
Book a consultation with an attorney to discuss your entity requirements and solutions.
- Use your corporate name on all legal documents
- Annual tax filing – IRS form 1120S
- Record annual minutes
- Must maintain “Corporate veil”
- Separate accounts (everything)