Idaho C-Corporation & Idaho S-Corporation Comparisons

An Idaho 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. These are general factors that any corporation receives.

• The owners are known as shareholders.
• The shareholders elect a board of directors to manage the Idaho company.
• The Idaho corporation has a life of its own and does not dissolve when ownership changes.

Below are the advantages and disadvantages of having an Idaho corporation in General:

Advantages

• Idaho Liability of shareholders limited to price paid for their stock
• Can raise funding by selling stock
• Cost of Idaho employee benefits are deductible, greater fringe benefits

Disadvantages

• Cost of formation is higher
• Process of incorporation is formal and requires filing with the Secretary of State
• “C” Corporations are often double taxed, first on profits then on dividends
• Board members can be held liable
• Requires formalities such as annual shareholders meetings, board meetings and keeping minutes.
• Failure to follow formalities can result in the loss of limited liability status

There are two types of corporations that are popular with small to mid-sized businesses.

Idaho “C” Corporations

An Idaho “C” corporation is the regular corporation that is taxed as a separate entity.

It requires these tax forms:

• Form 1120 or 1120-A: Idaho Corporation Income Tax Return
• Form 1120-W Estimated Tax for an Idaho Corporation
• Form 8109-B Deposit Coupon
• Form 4625 Depreciation
• Idaho Employment Tax Forms
• Other forms as needed for capital gains, sale of assets, alternative minimum tax, etc.

Idaho “S” Corporations

An Idaho “S” corporation allows the profits to be taxed like a partnership if certain qualifications are met. This means that profits and losses pass-through to the owner’s personal tax return.

• • Form 1120S: Income Tax Return for S Corporation
  • 1120S K-1: Shareholder’s Share of Income, Credit, Deductions
  • Form 4625 Depreciation
  • Employment Tax Forms
  • Form 1040: Individual Income Tax Return
  • Schedule E: Supplemental Income and Loss
  • Schedule SE: Self-Employment Tax
  • Form 1040-ES: Estimated Tax for Individuals
  • Other forms as needed for capital gains, sale of assets, alternative minimum tax, etc.