Advantages
of C Corporations
1.
Lower tax rate on profits of the corporation
Profits of a C corporation are taxed at a relatively low rate.
The corporation is taxed at 15% on amounts up to $50,000.
Entities
such as S corporations flow their profits through to the shareholder
at the end of the year. Profits are then taxed at the higher personal
rates.
2.
Unlimited number of Shareholders
C corporations are not limited to a maximum number of shareholders
as opposed to S corporations where no more than 75 individuals
can own shares.
3.
Not limited in the type of Shareholders
C corporation owners can be individuals, trusts, non-resident
aliens, corporations, partnerships or LLC's. Owners of S corporation
shares can only be individuals, estates or certain types of trusts.
4.
Ability to choose a fiscal tax year
C corporations have flexibility in electing a fiscal tax year
that best matches the company's business cycle. S corporations
have a number of restrictions in choosing a year-end other than
December 31.
C
corporations can also use a delayed tax year to defer taxes. S
corporations are required to make payments reflecting any tax
deferral.
5.
Expenses are deductible on the corporate level
Expenses like charitable contributions can be deducted. S corporations
pass charitable expenses through to the owners, who might not
be able to deduct them.
6.
Use of Net Operating Losses
Federal Losses can be carried back or forward to other year's
tax returns. This can generate tax refunds or offsets to future
taxable income.
(This information is designed to be of general interest. The specific techniques and information discussed may not apply to you. Before acting on any matter contained herein, consult with your professional advisor.)
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