Taxation

  • C corps are separately taxable entities.
    They file a corporate tax return (Form 1120) and pay taxes at the corporate level. They also face the possibility of double taxation if corporate income is distributed to business owners as dividends, which are considered personal income. Tax on corporate income is paid first at the corporate level and again at the individual level on dividends.

  • S-Corps are pass-through tax entities.
    They file an informational federal return (Form 1120S), but no income tax is paid at the corporate level.
    The profits/losses of the business are instead “passed-through” the business and reported on the owners’ personal tax returns. Any tax due is paid at the individual level by the owners.

  • Personal Income Taxes
    With both types of corporations, personal income tax is due both on any salary drawn from the corporation and from any dividends received from the corporation.

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Business Facts

  • There are 28 million small businesses in the U.S. -- which outnumber corporations 1162 to 1.
  • 70% of small businesses are owned and operated by a single person.
  • Small businesses employ 57% of the country's private workforce.
  • Small businesses pay 44% of U.S. payroll.
  • Only 50% of businesses survive five years.
  • Immigrants make up 12.5% of small business owners nationwide.
  • 60 to 80% of all new jobs come from small businesses.

For further assistance with filing a Corporation or questions regarding the process please contact our specialists at 888-300-3039.

Formation

Generally, a corporation files articles of incorporation with the government, laying out the general nature of the corporation, the amount of stock it is authorized to issue, and the names and addresses of directors. Once the articles are approved, the corporation's directors meet to create bylaws that govern the internal functions of the corporation, such as meeting procedures and officer positions.


A corporationis an independent legal entity owned by shareholders. This means that the corporation itself, not the shareholders that own it, is held legally liable for the actions and debts the business incurs.

Liability

No limited liability and company members could still be held responsible for unlimited losses by the company.

Corporation (C-Corp) (S-Corp)