A C corporation is the most common form of incorporation. It is a separate legal entity that is owned by shareholders. Most large, publicly traded companies are C corporations. S corporations combine most of the advantages of C corporations with a better tax structure for the owners. The income of an S corporation is not taxed at the corporate level. Instead, the reported income is passed through to the owners where it is taxed at personal tax rates. Corporations offer the strongest protection for business owners or shareholders.
Corporations offer many benefits that your company/organization may find useful such as being able to have an unlimited number of investors. They also offer the most flexibility when transferring ownership of the business. With a corporation it is easier to attract capital with the sale of stocks and bonds. Other benefits include: paying their own taxes, owning property, entering contracts, and to sue and be sued independently of those who own them as well as being responsible for their own debts and actions. Corporations also have the benefit of dividing income between the corporation and the owners. This ability to distribute income can save the corporation considerably on taxes. This distribution of profits, however, also causes double taxation.
Corporations can have certain tax advantages over other forms of businesses such as: having few restrictions on reporting capital losses, being less likely to be audited than sole proprietorships, and they may be able to deduct 100% of the cost of health and life insurance premiums paid on behalf of owners and employees. Corporate income is also not subject to Social Security, workers compensation, and Medicare taxes.
. If you are new to business or uncertain as to what type of business structure is best for your business, consult a tax professional, accountant, or business attorney before you start a corporation. Operating your business as a corporation grants you credibility and shows that the business is viable, which is more attractive to creditors and investors.
Please call us today at 817-484-0212 to speak to us today about our corporate formation services