Corporation Definition
Corporation
DEFINITION
Incorporating is one of the best ways a business owner can protect his or her personal assets. Most people choose to incorporate solely for this reason, but there are other advantages as well. For example, the corporate business structure allows you to save money in taxes, provides greater business flexibility and makes it easier to raise capital. And for small companies just starting, an S Sub Chapter give you more savings and freedom.
Benefits of a US Corporation
1. Liability.
Structuring your business takes the liability away from you and your family. This new entity creates a new identity that becomes responsible for the liability. US Corporation or US LLC signs leases, borrows money, and buys goods and services on credit - you’re not personally liable.
Structuring your business takes the liability away from you and your family. This new entity creates a new identity that becomes responsible for the liability. US Corporation or US LLC signs leases, borrows money, and buys goods and services on credit - you’re not personally liable.
2. Tax Advantages
Take what would otherwise be non-deductible personal expenses and turn them into legitimate deductible business expenses. Use of motor vehicle, use of part of your residence by the Corporation with the utilization of a lease not considered a "home office", and have Annual meeting of shareholders and directors in far away or "resort city" and deduct for taxes. The goal is to convert as many non-deductible personal expenses into legitimate deductible business expenses.
Take what would otherwise be non-deductible personal expenses and turn them into legitimate deductible business expenses. Use of motor vehicle, use of part of your residence by the Corporation with the utilization of a lease not considered a "home office", and have Annual meeting of shareholders and directors in far away or "resort city" and deduct for taxes. The goal is to convert as many non-deductible personal expenses into legitimate deductible business expenses.
IRS Form 1040, Schedule C (Profit or Loss from a Business) which is used by sole proprietors to report the businesses income and expenses is the target of many IRS audits, however, compare this to the audit rates of similar businesses that have incorporated or established multi-member LLC and the audit rate is almost NIL
3. Privacy
The US Corporation or US LLC can be established in such a way so that shareholder/owners remain anonymous, many times the same anonymity can be accomplished for officers and directors.
4. Marketing
Doing business with a corporation or an LLC, places everyone involved on a higher professional level. It gives the business the appearance of being much bigger than it is, and it attracts investors more easily.
The US Corporation or US LLC can be established in such a way so that shareholder/owners remain anonymous, many times the same anonymity can be accomplished for officers and directors.
4. Marketing
Doing business with a corporation or an LLC, places everyone involved on a higher professional level. It gives the business the appearance of being much bigger than it is, and it attracts investors more easily.
5. Raising Capital
Because of the ease of transfer of ownership and the "separate entity" concept of the Corporation or LLC, it is much easier to attract investors.
Because of the ease of transfer of ownership and the "separate entity" concept of the Corporation or LLC, it is much easier to attract investors.
6. Transfer of Ownership
Put real estate in Corporations or LLCs and transfer through private agreement, such as stock transfers rather than formal real estate transfer and closing. You can re-title the asset to a Corporation or LLC yet continue to maintain control.
7. Minimize IRS Audits
Sole proprietors must file an IRS Form 1040, Schedule C (Profit or Loss from a Business). Unfortunately, the IRS audits sole proprietors that file the form at a higher audit rate than returns for an incorporated micro business. Also, sole proprietors with home office deductions face even more risk of audit by filing the IRS Form 8829 (Expenses for Business Use of Your Home) for home office deductions. S or C corporations avoid such scrutiny.
What Corporations Can't Pay For 1) Mortgage - but it can pay rent 2) Food 3) Clothing. Your Corporation Can Pay For Everything Else
Put real estate in Corporations or LLCs and transfer through private agreement, such as stock transfers rather than formal real estate transfer and closing. You can re-title the asset to a Corporation or LLC yet continue to maintain control.
7. Minimize IRS Audits
Sole proprietors must file an IRS Form 1040, Schedule C (Profit or Loss from a Business). Unfortunately, the IRS audits sole proprietors that file the form at a higher audit rate than returns for an incorporated micro business. Also, sole proprietors with home office deductions face even more risk of audit by filing the IRS Form 8829 (Expenses for Business Use of Your Home) for home office deductions. S or C corporations avoid such scrutiny.
What Corporations Can't Pay For 1) Mortgage - but it can pay rent 2) Food 3) Clothing. Your Corporation Can Pay For Everything Else
Download PDF Brochures
Arizona Corporation Brochure
California Corporation Brochure
Delaware Corporation Brochure
Florida Corporation Brochure
Illinois Corporation Brochure
Nevada Corporation Brochure
North Carolina Corporation Brochure
Ohio Corporation Brochure
Texas Corporation Brochure
Virginia Corporation Brochure
A "C" Corporation is the most common corporate structure.It is also called a general corporation. A “C” corporation may have an unlimited number of shareholders. It is normally chosen by those businesses that are planning to have more than 30 shareholders or planning a large, public stock offering. These general corporations usually pay taxes at two levels. First, the corporation is required to pay taxes based on the corporation’s profits. Additionally, the owner or shareholder is taxed when the corporation distributes profits, known as dividends, to the individual. This is commonly known as “double taxation
An "S" Corporation is a general corporation (C corporation) that has elected a special tax designation by the Internal Revenue Service. The S designation is chosen after the corporation has been formed and allows it to avoid double taxation. The designation allows the owners or shareholders to be taxed only at the individual level, rather than at the corporate and individual levels. All income for the business is only taxed at the individual shareholder or owner level. This designation is often ideal for small businesses and entrepreneurs since it prevents double taxation while providing limited liability and an enduring structure.
Note: While the S Corporation features similar pass through taxation to an LLC, in the area of self-employment taxes an S Corporation can have an advantage over an LLC. The compensation (salary and bonuses) of S Corporation shareholders is subject to self-employment tax, but not on the profits automatically allocated to them as a shareholder. This can be an advanced and aggressive tax strategy, so be sure to consult with the appropriate tax and legal specialists before pursuing it. The one drawback is that S Corporations must have shareholders who are US Citizens or US Residents
Note: While the S Corporation features similar pass through taxation to an LLC, in the area of self-employment taxes an S Corporation can have an advantage over an LLC. The compensation (salary and bonuses) of S Corporation shareholders is subject to self-employment tax, but not on the profits automatically allocated to them as a shareholder. This can be an advanced and aggressive tax strategy, so be sure to consult with the appropriate tax and legal specialists before pursuing it. The one drawback is that S Corporations must have shareholders who are US Citizens or US Residents
US C Corporation
An America C Corporation is the most popular corporation filing in the United States. Most companies listed on the Exchange are C Corporations. Some advantages are
- Owners assets are protected form company Liabilities
- Growth of corporation though stocks
- Business Tax Advantages
IncSmart.biz makes Incorporating a businesses affordable.
US Subchapter S Corporation
C Corporations can elect to be taxed as a S Corporation with the IRS. All stock holders of a S Corporation must be American Citizens with Social Security Numbers.
- Pass-through taxation to stock holders.
- Eliminates double taxation on dividends for stock holders
IncSmart.biz makes changes of your status to a Sub Chapter S easy
C Corporations can elect to be taxed as a S Corporation with the IRS. All stock holders of a S Corporation must be American Citizens with Social Security Numbers.
- Pass-through taxation to stock holders.
- Eliminates double taxation on dividends for stock holders
IncSmart.biz makes changes of your status to a Sub Chapter S easy
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