| Home | Free Articles for Your Site | Submit an Article | Advertise | Link to Us | Search | Contact Us | |
Custom Search
|
Article Surfing ArchiveTax Benefits of A 'C' Corporation - Funding - Articles SurfingIf you are going to form a corporation, you might be surprised to learn a 'C' corporation comes with a lot of tax benefits. While this article isn't intended to replace the advice of a good tax professional, it may serve to open your eyes to the value of a 'C' corporation. 'C' Corporation The 'C' in C corporation has a few legal ramifications, but it is primary a designation for tax purposes. Put in layman's terms, the designation simply means the corporation will act as its own tax entity. In contrast, an 'S' corporation acts as a pass through tax entity, pushing its financials down to the shareholder who report the information on their personal tax returns. The Internet Revenue Code sets out the law on tax and it contains a few juicy provisions for corporations. Lets take a look at one of the advantages. Incorporating When a party transfers something of value to another party, the IRS gets interested. It views the receipt of something of value as a taxable event. In simply terms, if you pay me for forming a corporation, I have to report and pay taxes on the money. Since a C Corporation is a stand alone tax entity, what happens when you purchase stock? You have made arrangements to form a 'C' corporation. Now you have to buy stock in it to become a shareholder. If you exchange money or property for the shares, the IRS takes the position no taxable event occurred. In essence, this means the corporation will not have to report you contribution as part of its revenues. If the money isn't considered a part of the corporate revenues, no tax must be paid on it. The exact rules for funding a corporation are a bit more complex. With any tax issue, you can expect there to be roughly fifty exceptions and qualifiers. For instance, if you were to exchange services instead of money for the stock, the above example would not apply. Make sure you speak with a tax professional to handle your particular situation correctly. In Closing Many people choose a business entity without considering all relevant aspects. Taxes definitely constitute one of these aspects. Make sure you look into them prior to making your decision.
RELATED SITES
Copyright © 1995 - Photius Coutsoukis (All Rights Reserved). |
ARTICLE CATEGORIES
Aging Arts and Crafts Auto and Trucks Automotive Business Business and Finance Cancer Survival Career Classifieds Computers and Internet Computers and Technology Cooking Culture Education Education #2 Entertainment Etiquette Family Finances Food and Drink Food and Drink B Gadgets and Gizmos Gardening Health Hobbies Home Improvement Home Management Humor Internet Jobs Kids and Teens Learning Languages Leadership Legal Legal B Marketing Marketing B Medical Business Medicines and Remedies Music and Movies Online Business Opinions Parenting Parenting B Pets Pets and Animals Poetry Politics Politics and Government Real Estate Recreation Recreation and Sports Science Self Help Self Improvement Short Stories Site Promotion Society Sports Travel and Leisure Travel Part B Web Development Wellness, Fitness and Diet World Affairs Writing Writing B |