A C Corporation is a legal entity which is taxed separately from its shareholders. A common structure for many large Corporations, a C Corp has different advantages those of an S Corporation or LLC.

Benefits of C Corporations

  • Lower risk of audit.
  • Owners and shareholders face limited liability.
  • No restrictions on shareholding.
  • Easily transferable funds.
  • Additional tax benefits and deductions.
  • Ability to offer stock options
  • Easier to attract investors.
  • Charitable donations can reduce taxable income
  • Massive income possibilities if you go public.

In some cases, a small business can benefit from C Corp status. It is wise to review all business entity options with a trusted EA, CPA or Tax Attorney when setting up a business. Then on an annual basis, the EA or CPA can advise you if a change in entity might be to your advantage. At Torchlight Tax, this is part of our annual service.

How Are C Corporations Taxed?

A C Corporations is taxed on the net profit of the corporation. This can lead to double taxation for shareholders, as they are also subject to taxation on their distributions from the C corporation.

Avoiding Double Taxation

Of course, this means if you spend all the gross profit on tax-deductible expenses (including payroll), then the net profit is zero and the corporate tax is zero This avoids double taxation. Also, unlike LLCs and S Corporations, a C-Corporation can take a certain percentage (depending on the year) of its gross profits as charitable donations and thereby reduce its taxable income and resulting tax.

Then again, if a C-Corporation does not make any distribution to its shareholders (and instead leaves the money in the corporation) this also avoids double taxation, at least for a time, as there is no taxable income to the shareholders.

Creating a Corp to Accumulate Assets Tax Free

One could start a C Corporation on the side while living off the income of a job. Each year, one could take no distribution from the corporation. The corporation would be taxed at the corporate rate (21%) on its profits which might be lower than your personal tax rate. One could even zero out the corporate profit by buying (for example) business equipment and advertising and build the gross receipts and assets of the corporation while legally avoiding taxes. This only works if you do not need theprofit from the corporation to live on.

Then some years later, one could sell the corporation or shares of the corporation and get taxed at the lower long-term capital gain tax rate. For an industrious wage earner, he could set this up on the side and build a corporation pretty much tax-free on an annual basis that he would then sell shares of at the lower capital gain rate. This could be used for college for the kids, retirement, or as a safety net. If you get laid off on the job, how great would it be to have a functioning corporation with income and assets!

Donating C Corporation Shares to Eligible Charities

Also, one could donate corporation shares to a charity, have a buyer buy the shares from the charity, pay no income tax on the sale of those shares, and wind up with a charitable donation to offset OTHER income.

Other C Corporation Strategies

There are many interesting scenarios and strategies, of which the above are a few. I do not advise doing strategies like this on your own. I have given you here only the broad strokes, but a trusted CPA/EA/Tax Attorney should be involved to make sure all your bases are covered.

Is a C Corporation your Best Option?

For some, C-corporations may be your best option. If you are starting out and trying to decide, you are welcome to call Torchlight Tax for a free consultation as to which business entity is best for your situation. As you move into the future, your business will change, and we will be happy to advise you if another business structure is best for your company.

When one is doing taxes for a C corporation, a higher quality of professionalism is expected by the IRS in the bookkeeping, accounting, and tax preparation. Attempting to do these hats yourself, if you are not properly trained, may be detrimental. One of the Torchlight Tax EAs or CPAs can assist you in tax preparation and planning for your C-Corporation and make sure your tax savings are maximized and your hassle is minimized.

When you do your C corporation taxes with Torchlight Tax, your C-Corporation tax return is reviewed by a second tax expert to make sure all is correct, and no tax savings are missed. You also benefit from the fact that Torchlight Tax is one team with a network of offices. Each team member has the purpose to save your tax dollars and make the whole tax experience as painless as possible. Different EAS and CPAs have expertise in different tax specialties. An EA holds the highest federal tax credential. A CPA holds the highest state tax credential. This does not mean they know everything. There are millions of words in the tax code, related regulations, court cases, and so on. No one knows it all. If one of our tax pros has a question or is looking for an additional tax saving strategy, he can simply pick up the phone and ask another CPA, EA, or Tax Attorney in the Torchlight Tax Network who may be more trained in a certain specialized field of taxes. Individual practitioners do not have this option.

Just as in sports, a team operating with a common purpose is superior to an individual or group of individuals, even if the individuals are as highly trained. And please note: few tax practitioners are as highly trained and experienced as the Torchlight Tax team. At Torchlight Tax, your tax return is completed by a licensed EA or CPA. Another advantage of Torchlight Tax is our team includes administrative support staff who wear their hats in supporting the tax pro. You do not need a highly trained CPA or EA to be filing papers or handling all the robot and sales phone calls. By having administrative support, the EA or CPA is available to handle your questions year-round, saving you money, time, hassle, and worry.

Making Taxes as Painless as Possible

Also, our job is also, in addition to legally saving you money, is to make the tax process as pleasant and painless as possible. Advising on tax savings strategies is part of this. Advising you of how to handle a tax debt and handling your questions is part of this.
Unlike the big franchise tax mills, we are here to answer your questions year round. We look forward to hearing from you.

Tax Preparation in the Las Vegas Valley

When it comes to tax preparation, accounting, and IRS representation in the Las Vegas Valley, Torchlight Tax is ready to save you tax dollars. Contact us today for assistance in C corporation tax returns. Free Consultations are available.
Call us at 1-877-758-7797 or 702-463-1818 or email us at info@TorchlightTax.com. We can transfer your call to a branch office near you or help you directly from our central office. .

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