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| Why IncNow? Agents and Corporations, Inc.. has been a family owned and attorney-operated business since 1974. For over 30 years, entrepreneurs have trusted us to form their corporations and LLC's, for as little as $10 plus state and agent fees. More >> |
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Most popular Florida Tasks:
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What is a Corporation?
A Corporation is a legal "person" that exists completely separately from the natural persons it is composed of. The laws of the state of incorporation govern the internal affairs of a Corporation. When going through the incorporation process, an entrepreneur has the opportunity to search for the state with the most business-friendly laws. The best choice of state rarely happens to be the state in which the entrepreneur lives.
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C-Corporations versus S-Corporations
During a company’s initial formation process, the distinction between C-Corporations and S-Corporations should not be a concern. There is no difference between the Articles of Incorporation for a C-Corporation versus the Articles of Incorporation for an S-Corporation. Every Corporation in every U.S. state starts out simply as a Corporation.
At a later date (after the company’s formation), however, a business may want to consider the following attributes and benefits of C-Corporations and S-Corporations.
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C-Corporations:
Though many owners know about the dreaded drawback of "Double Taxation", there are several C-Corporation benefits that are often overlooked.
C-Corporation Financial Benefits:
- 15% corporate income tax on the first $50,000 of corporate income (this allows more working capital to stay in the company or pay off debts)
- 15% dividend tax rate (after-tax corporate income distributions to individuals)
- Ability to "income average" (shift profits and losses between years to reduce taxes)
- Ability to offset future gains by building up operating losses during the first few years
- Additional tax deductions (such as MERP)
- Ability to use promissory notes to borrow money from the Corporation
- Ability to elect a fiscal year
- Owners pay a lower net tax than they would pay in an S-Corporation
Benefits for Consulting Companies
A consulting business can be classified as a C-Corporation and enjoy the associated tax benefits if at least 6% of the company’s stock is issued to a "non-employee" (such as a spouse or another trusted person who does not work for the company). This is a loophole in the traditional rule that Personal Service Corporations cannot be C-Corporations.
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S-Corporations:
Many owners convert their Corporation to an S-Corporation in order to reduce the amount they contribute to Medicaid and Social Security. (Note: Partnerships, which are taxed under "subchapter K," cannot choose the S-Corporation structure).
In an S-Corporation, only part of the owner's salary / bonuses is subject to self-employment tax; the other portion is deemed to be an "S-Distribution" (and is subject only to individual tax - not Medicaid or Social Security tax). This loophole can allow owners to reduce their employment tax burden by 3% or more.
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Choosing 'C' or 'S':
All Corporations start out simply as C-Corporations for tax purposes.
If the owners later wish to be taxed as an S-Corporation, they must file Form 2553 (a Subchapter S Election) within 75 days of the initial formation or within 75 days of the beginning of the calendar year. The Corporation would need to have no more than 100 owners and those owners must all be either U.S. citizens or permanent resident aliens ("green card" holders).
Once the S-Election is made, the company must file Form 1120 ‘S’, rather than Form 1120. (Note: whether or not a company elects to be taxed as an S-Corporation, it is still considered a "General Corporation" by the state of formation.
An LLC can also hold tax elections. Rather than being taxed as a Partnership, an LLC can elect to be taxed as an S-Corporation or as a C-Corporation. For S-Corporation tax treatment, the owners would need to file Form 2553. For C-Corporation tax treatment, the owners would need to file Form 8832.
Asset Protection:
Agents and Corporations, Inc. usually recommends that liabilities between separate businesses be "segregated." For owners of small businesses (e.g. restaurants) it is usually best to own land through an LLC and lease that property to your business (which would be run as an S-Corporation). This would prevent a creditor of your business from being able to collect debts against your equity in the real estate.
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Incnow Incorporation Services
Complete Service
COMPLETE Florida Corporation (Click Here) ($298) -- one price includes:
*Tax Strategies and Legal Planning:
Over the past 30 years, we have helped hundreds of entrepreneurs use a Corporation or Limited Liability Company to save taxes. We have compiled Tax Strategies and Legal Planning into a package that brings together planning suggestions and forms in a way not seen elsewhere.
The easy to use forms help you with tax elections, annual minutes, promissory notes, Medical, Dental and Drug Expense Reimbursement Plans (MERPs) and your annual neeting agenda. This unique package is included in the $298 Complete Incorporation and LLC packages.
EIN: Federal EIN Numbers are easy to obtain by phone after you incorporate. Simply call 1-800-829-4933 from inside the US and the IRS will assign your company an EIN for free within 10 minutes.
Call without charge to check and reserve your Corporation names.
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Basic Service
BASIC Florida Corporation (Click Here) ($189) -- The economy service includes only:
EIN: Federal EIN Numbers are easy to obtain by phone after you incorporate. Simply call 1-800-829-4933 from inside the US and the IRS will assign your company an EIN for free within 10 minutes.
Call without charge to check and reserve your Corporation names.
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About Us
The Williams Law Firm, P.A. acts as general counsel for Agents and Corporations, Inc. The firm has an "A" rating from the Martindale Hubbell Law Directory. To decide on the type of company you should form and to get help with the technical details, call 800-759-2248.
Contact Us
If you have any questions on which entity or state to choose, then please contact us for immediate assistance.
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David Wiliams, Esq., John Williams, Esq., or any of our Incorporation Specialists |
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Agents and Corporations, Inc.
300 Fifth Avenue South
Suite 101-330
Naples, Florida 34102
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302-575-0877 |
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800-759-2248 |
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302-575-1642 |
E-Mail: |
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When sending us an e-mail, please provide us with your name, address, telephone number and fax number so that we can promptly respond to your request. Thank you.
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Vice President John L. Williams, Esq., is an attorney licensed in Delaware, New York, Massachusetts, New Jersey, and Pennsylvania.
