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A C-Corporation can offer a single owner or multiple shareholders greater benefits than all other business entities. This includes more tax free fringe benefits, diverse stock options, investor preferred, lower tax rates on dividends, IPO, no-flow through income, worldwide recognition and much more. See the below “Definition Hub” for detailed information about the C-Corporation.
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The C-Corporation allows owner/shareholder-employees to receive the most amount of tax-free fringe benefits out of all business entities.
C-Corporations are allowed to offer their owner/shareholder-employees a plethora of fringe benefits. These benefits are considered business expenses and not taxable income. As long as the plan is nondiscriminatory, the reimbursements are not taxable to the employees.
When ready to form these types of fringe benefits, a nondiscriminatory plan will be spelled out in the Bylaws. If you are afraid of offering too much to your non-owner/shareholder-employees, then you can include a more difficult to obtain fringe benefit requirement.
No Two-Percent Rule
C-Corporations do no limit tax-free fringe benefits its owner/shareholder-employees for those who own more 2% like an S-Corporation. A C-Corporation receives full deductions for the cost of employees’ (including owner-employees) health insurance, group term life insurance of up to $50,000 per employee, and even long-term care premiums without regard to aged based limitations.
If one has a small corporation and a lot of medical expenses that aren’t covered by insurance, the corporation can establish a plan that treats all expenses as tax deductible. Fringe benefits such as employer-provided vehicles and public transportation passes are also deductible.
A C-Corporation is a legal and separate entity from its owners. Because it’s a legal entity, it can be taxed, sued, enter into contracts and borrow money.
1. The owners are known as shareholders.
2. The shareholders elect a board of directors to manage the company.
3. The corporation has a life of its own and does not dissolve when ownership changes.
4. C-Corporations can be owned by one or more shareholders.
5. Allows owner/shareholder-employees to receive the greatest tax-free fringe benefits out of all business entities.
6. C-Corporations can issue multiple classes of stock with an unlimited number of shares.
7. Any entity, including individuals, LLCs, and other S and C-Corporations, can be a shareholder.
8. C-Corporations have the least number of rules relating to ownership of shares.
9. C-Corps can easily transition from a closely held corporation to a thriving stock on publicly traded markets.
10. C-Corporations can retain earnings for future growth after the 21% corporate taxes are paid.
11. Distributed profits are paid out to owners/shareholders through a dividend (1099-DIV) form.
Common types of fringe benefits:
Health insurance premiums
Long-term-care and disability insurance premiums
Medical reimbursement plan
Company-owned cars or other vehicles
Moving and Housing Benefits
Memberships in fitness clubs
And many more
Warning! Sole Prop.
Yes, the sole proprietor pays the most amount in taxes and has absolutely no limited liability protection. A Lawyer could help their client strip you of all your personal assets, savings, house, investments, and then force you to pay a settlement.
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Before you can hire an employee, the State and IRS requires that payroll and payroll taxes be setup properly. Therefore, we will need to setup your company’s payroll by applying for Workers Compensation, Unemployment, State and Federal Withholdings, and EFTPS Electronic Federal Tax Payment System. When we have completed the payroll setup, you will receive the required employee documents that each new employee must fill out so we can file it with the State.
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