C and S Type Corporations in U.S.
A C corporation (or C corp.) is a corporation in the United States that, for Federal income tax purposes, is taxed under and Subchapter C of Chapter 1 of the Internal Revenue Service (IRS) Code.
Forming a C corporation allows a business owner to create a separate legal structure that can shield their personal assets from judgments against the business.
A C corporation is a separately taxable entity; it files a corporate tax return reporting profits or losses, and any profits are taxed at the corporate level.
C corporations face the possibility of double taxation when profits are distributed to shareholders in the form of dividends, as the shareholders must report dividends as personal income and pay tax on them at the individual level.
The C corporation can have an unlimited number of shareholders; it can have non-US residents as shareholders; it can have multiple classes of stock.
S Corporations get their name from a unique section of the Internal Revenue Service (IRS) Code, Subchapter S of Chapter 1.
A corporation can eliminate the disadvantage of double taxation of corporate income and shareholder dividends by applying for S Corporation status.
Owners report profit and loss on their individual tax returns. They still have the opportunity to separate and protect their personal assets from judgments against the business.
An "S-Corporation" is a regular corporation that must meet specific eligibility criteria, and they must notify the IRS of their choice to be taxed as an S-Corporation within a certain period of time.
The eligibility criteria include, but not limited to, the following:
To incorporate a US company please contact our International Director Stephen Mauskopf.
In addition to forming the corporation, Vcorp will help with subsequent required tax filings, both on federal (IRS Form 2553) and state level. In addition, Vcorp Services developed and implemented a tracking system that alerts the Vcorp filing professional about the 75 day deadline for tax notice filings, which allows Vcorp to alert client by email.
Disclaimer: This post does not constitute legal advice.
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