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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 Nevada Tasks:
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What are Corporations?
A Corporation is a form of business entity that legally exists completely separate from the people running it. A Corporation is governed by the laws of the state of incorporation so it is important for an owner to "forum shop" for, and incorporate in, the most business-friendly state possible. This rarely happens to be the state in which the owner resides.
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Choosing between C-Corporations and S-Corporations
The Initial Decision
Why Form a C-Corporation?
"Double Taxation" is widely recognized as a significant drawback of the C-Corporation corporate structure. There are, however, many benefits of the C-Corporation that can greatly outweigh this downside. Some of these benefits include:
C-Corporation Financial Benefits:
- 15% tax on the Corporation's first $50,000 of income
- 15% tax on dividends distributed from after-tax corporate income
- Promissory notes (to borrow money from the Corporation)
- Fiscal year (optional)
- Income averaging (reducing taxes by shifting profits and losses between years)
- Offsetting future gains (by building up operating losses during the first few years)
- More tax deductions (e.g. MERPs)
C-Corporations for Consultants:
Despite the rule that Personal Service Corporations are not eligible for the C-Corporation structure, Consultants can take advantage of a C-Corporation loophole. A consulting company can be classified as a C-Corporation if it gives at least 6% of its company stock to "non-employees" (e.g. spouses).
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Why Form an S-Corporation?
The S-Corporation structure is a good way for owners to reduce the amount of money they pay to Social Security and Medicaid. The owner's salary is broken up into two parts: one part that is subject to self-employment tax, and one part (deemed an "S-Distribution") that is only subject to individual tax – not Social Security or Medicaid tax. This allows for a reduction in the employment tax burden of 3% or more.
(Note: Partnerships, which are taxed under "Subchapter K," cannot choose the S-Corporation structure).
Protecting Assets:
Incnow (Agents and Corporations, Inc.) usually suggests that liabilities between separate businesses be legally separated. For small business owners, it is often best to own the company land through an LLC and then lease that property to your business (which could be run as an S-Corporation). This prevents judgment creditors of your business from being able to collect against your real estate equity.
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Election Requirements
A Corporation filed with any state, according to the Internal Revenue Code, is to be taxed under "Subchapter C." This means that, for tax purposes, all Corporations start out as C-Corporations.
After formation, if a Corporation's owners want to be taxed as an S-Corporation, they would need to file a Subchapter S federal tax election (via Form 2553) within either 75 days after incorporating or 75 days after the beginning of the calendar year. To make this election, the Corporation is required to have no more than 100 owners, all of whom must be U.S. Citizens or permanent resident aliens. After the S election is made, the company must file Form 1120 'S', rather than Form 1120.
Regardless of whether the company is an S-Corporation or C-Corporation, it will still be considered a General Corporation by the state of incorporation.
LLCs can also choose to be taxed as either S-Corporations or C-Corporations, rather than as Partnerships. For S-Corporation treatment, Form 2553 would be required. For C-Corporation treatment, Form Form 8832 would be required.
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Form a Nevada Corporation
GOLD Service
Basic Service plus Documentation
Basic Service
Basic Service Package (click here) ($189) -- includes:
Note: NOT INCLUDED in the Basic Service plus Documentation Package or the Basic Service Package, but REQUIRED under Nevada Law is the ($125.00) Initial Statement of Officers / Directors. (This statement is REQUIRED to be filed in paper or online within 30 days after formation).
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Useful Incorporation Links
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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.
18124 Wedge Parkway, Suite 925
Reno, Nevada 89511
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302-575-0877 |
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800-759-2248 |
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302-575-1642 |
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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.
