Corporations are the oldest type of entities in the U.S. and the most trusted. The company pays its own Taxes. Perfect type of company if your planing to raise money from investors.
Just like LLCs, the owners of an corporation are usually not personally responsible for business debts. By default, a corporation is consider a c-corp, if desired you can apply for small business election(s-corp). As a C-corp the corporation suffers from double taxation. the company pays tax as at the corporate level and once the dividends are distributed to the owners you will pay personal taxes over the income. If you do not want this default tax status you have 75 days after your company is created to change its tax treatment.
Advantages:
Corporations pay its own Taxes and as such owners do not declare corporate income unless dividends are given..
A corporation can elect to be taxed as a S-corp or corporation.
A corporation can elect to be taxed as a S-corp or corporation.
Protection to owners fromliabilities for the debts of the business.
Foreigners and other companies can be an owner of the Corp.
Disvantages:
Double Taxation, the corporation pays income tax and the owner pay as well when dividend are paid.
The stricter formalities.
In some states corporations pay state income tax, exempt states Nevada, Washington, Wyoming, Texas, and South Dakota.
Commonly Asked Questions on Forming an Corporation
If you have any questions about registering an Corporation give as a call or send us an email.
The process of registration normally takes from 1-2 weeks in most States.
Foreigners and other companies can own it.
The formation of the Corporation can be done all Online.
After your company is approved the next step is to apply for an EIN.
Only in a few cases will you received a physical document as in most states the documents are delivered electronically.
You do not have to immediately start operating your business.
Once open the Corporation, it can be closed at any time.
Federal Income tax returns are not filed with the IRS until the next year.
You do not to have to hire employees.
A Corporation can be formed with only one owner.
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