What is an Entity?
What is a corporation?
What is a limited partnership?
Am I personally liable for the corporation’s obligations?
What are the Tax Benefits of Using a Corporation, LLC or LP?
What is a C Corporation?
A C corporation is a corporation that is taxed at two levels. First, the corporation pays corporation taxes on corporate profits. Then, with any money left over, the corporation may distribute profits to the shareholders. These profits, or dividends, are taxed to the shareholders. Thus with a Corporation there is “double taxation”. The “C” refers to an IRS code section. Despite the double taxation, C Corporations offer many planning and benefit opportunities.
Corporations have been used for over 500 years to limit owners’ liability and thus encourage business investment and risk taking. Their use for this purpose continues to this day.
You will hear about both C corporations and S corporations. Both are corporations with charters granted by the state of organization. You can organize in Nevada for the best asset protection laws, for example, and qualify to do business in California. In that case, you will have one corporation paying annual fees in two states (which many people do).
The C and the S refer to IRS Code Sections. C corps feature a double taxation – one tax at the company level and another tax on profits distributed to shareholders. This double tax is why many people consider S corps, which has only one level of tax. But there are restrictions on ownership of S corps, where as there are no such limits on C corps.
Let Corporate Direct help you decide which corporation is best for you, or learn more about the strengths and weaknesses of different entity types from our book “Start Your Own Corporation“. See the rest of Garrett Sutton‘s Rich Dad series of books for business owners.
What is an S corporation?
S Corps are favored by many business owners. The single taxation (as opposed to the double tax of a C Corp) is limited liability protection – especially with a Nevada corporation with charging order protection extended to corporate shares – make the S Corp an attractive entity choice.
Please know that of all of the entities the S Corp has certain restrictions on ownership. There can only be 100 or fewer owners, which all must be individuals or their living trusts. Corporations, multi member LLCs, and non-US residents cannot be S Corp owners. If the restrictions aren’t followed, the IRS will deem the corporation a double taxed C Corp.
Corporate Direct can help you understand the restrictions and benefits of the S Corporation.
What is a charging order?
Do any states offer charging order protection for corporate shares?
What is an Employer Identification Number (EIN)?
What are Corporate Formalities?
What is a ‘Resident’ or Registered Agent?
What are Corporate Minutes?
What is Corporate Notice?
What is business credit?
What are the Corporate Tax Rates?
To view a current listing of Corporate Tax Rates, click here.
What is involved with naming an entity?
How do foreign investors protect themselves in the U.S.?
Why form an entity in one state and then qualify in another?
How expensive is it to form and maintain a corporation, LLC or LP?
Corporate Direct, Inc. provides affordable entity formation and maintenance services. As our fee sheets indicate, given the risks associated with doing business and holding real estate as well as the possible loss of personal assets, the benefits of limiting liability and protecting assets for a very affordable price are quite substantial. Click here for our formation fees.