What The Differences Are Between Corporations
C Corporation
The corporation is the stalwart business entity most commonly formed for raising capital and limiting individual liability throughout the world. The corporation is a legally separate "person" which may live forever or be empowered to protect the shareholder from economic harm. It may own assets, sue or be sued, transfer its ownership easily, borrow money, mortgage its assets, and file bankruptcy. A board of directors and corporate officers remove day-to-day management from the hands of the owners (shareholders). Shareholders elect the board at shareholder meetings.
GENERAL CHARACTERISTICS
- Separate entity--a corporation is a separate legal entity formed to be a "fictitious legal" person. Easy transfer of ownership and assignment of equity.
- Limited liability--owners (shareholders) are insulated from debts and liabilities of the corporation by state law. Certain provisions must be met.
- Corporate articles--must be filed with the Secretary of State to form the entity.
- Capital generation--may borrow money, issue bonds, sell common and preferred stock, enter into investment contracts.
- Continuity of life--the entity may live forever without interruption by death of shareholders, directors or officers.
ADVANTAGES
-
Limited liability--no shareholder; officer or director may be held liable for debts of the corporation unless corporate law was breached.
-
Capital generation--may sell common or preferred stock, issue bonds, borrow money, mortgage assets, or contract for many types of financing.
-
Continuity of life--the entity exists forever so long as corporate regulations are met. No need to wind up operations if an owner or manager dies.
-
Ease of ownership transfer--the assets may be sold, transferred, pledged, or mortgaged simply by using stock.
-
Centralized management--practical control of business is performed by officers at the direction of the board of directors.
DISADVANTAGES
We believe that corporations have few disadvantages, and virtually none which cannot be easily overcome. For example, double taxation can occur when corporate profits are taxed at the entity level and are returned to investors as dividends to be taxed again as individual income. Family and "closely held" corporations frequently return money to investors by other means, thereby avoiding the double tax.
TAX IMPLICATIONS
Read IRS Publication 542 on corporate taxation.
Corporations file on IRS Form 1120 and report earnings and taxable profit.
May be subject to estimated tax payments (quarterly). Read IRS Publication 542 and Form 1120-W.
Must withhold and match employment taxes on any wages paid its employees.
Must file for a "Federal Tax Identification Number" using Form SS4.
Bookmark Us!
News & Updates
NEWS FLASH: Nevada now requires the Social Security number, date of birth, resident addresses, and telephone numbers of all shareholders, partners, officers, managers and members of all companies formed in Nevada on the state's business license. We bet they did not tell you that.
Wyoming state fees are 87% less than Nevada's. That includes the Nevada "hidden" officer filing fees of $125 that you learn about only after you start your company there, a fee Nevada will hit you within 30 days after you start your company! Oh, and the state business license fee of $200 per year, which was just doubled on July 1st, 2009! We bet they did not tell you about that "after-the-fact" fee either.
Wyoming has no business license fees or officer filing fees. This means we can deliver a quality company package for much less than you would pay in Nevada. And, your Wyoming state renewal fee is $50, in most cases, 84% less than what you will pay in Nevada. And, the nice thing about Wyoming is that is not the only reason to incorporate here.
NEW 2009 study shows Wyoming to be the most business-friendly, lowest tax state, of all 50 states...again.
