How To Start A C Corporation - Steps in forming a company in the United States (US) Welcome to our services page on forming a C Corporation in the United States! Creating a C Corporation should not be stressful, but it could be if done incorrectly. We are going to provide you with some basic steps for forming the right business enterprise for your business. It does not matter if you are an American citizen living in the United States (US) or a foreigner living in a foreign country. It still might make sense to form a C Corporation. As a business owner or entrepreneur, you may have decided that a C Corporation is the right choice for your business structure. We can help you navigate the process of forming a C Corporation in the United States so that you can start building your business with confidence. A C Corporation is a business structure formed as a separate legal entity from its owners. One of the advantages of a C Corporation is that it is subject to its tax rates and regulations, separate from the personal tax rates of its owners. In this article, we will look closely at C Corporation tax rates. Let us take the worry of how to start a C corporation from you. We are here to undertake the administration process to create a C corporation so that you focus on business priorities. As a foreign investor, you may need to obtain an Individual Tax Identification Number (ITIN) from the Internal Revenue Service (IRS) if you are a resident of America. C Corporation US Tax Benefits & Rates C Corporations are subject to a flat corporate tax rate on their taxable income. The current US Federal corporate tax rate is 21% for tax years beginning after December 31, 2017. In addition to the federal corporate tax rate, C Corporations may be subject to state and local corporate income taxes. Each state has its tax rates and rules, so it is essential to consult with us as Enrolled Agents (EA) tax specialists to determine the specific tax obligations for your C Corporation. You may wish to consider which state you form a C Corporation and carry out your business or real estate property investment activities. This is because the amount of taxes by state varies significantly. Florida has a 0% income tax, whereas New Jersey currently has a tax rate of 11.5% Please note that the state you carry our business or real estate property investment activities is where you will be taxed irrespective of where the C Corporation is created. Double Taxation One of the disadvantages of a C Corporation is that it is subject to double taxation. This means that the corporation’s profits are first taxed at the corporate tax rate, and then any dividends paid to shareholders are taxed again as personal income. This can result in a higher overall tax burden for C Corporations. However, there are ways to mitigate the impact of double taxation. For example, C Corporations can reinvest their profits into the business rather than paying out dividends, reducing their taxable income and tax owed. Additionally, C Corporations can take advantage of deductions and credits to lower their tax liability. International And Foreign Taxes Not only do you have to think about taxes in the United States (US), but you may need to think about international tax matters if you are a foreigner. Quite rightly, Certified Public Accountants (CPAs) and Enrolled Agents (EAs) will suggest that a Limited Liability Company (LLC) provides the same benefits as a C Corporation and has many other benefits. Those CPAs and EAs are correct if they think about American taxpayers. What about foreigners, “aliens” that wish to do business or invest in real estate property in the United States (US)? A term that you will have to get used to is “alien”. This strange word “alien” is the term the Internal Revenue Service (IRS) gives to foreigners. People living abroad outside the United States (US) must consider taxes in their home country. A Limited Liability Company (LLC) is seen as a pass-through entity. This means the members of the LLC earn the income. CPAs and EAs will rightly point out that an LLC may be taxed as a corporation. Albeit this works in the United States (US), it does not always work in other Countries. For example, someone who owns a US LLC elected for corporation tax by the IRS will still be seen as income earned by the individual owner in the United Kingdom (UK) and be subject to income tax rates by HMRC up to 45%. Our team of experienced professionals can guide you through every step of the process, including… Choosing a State to Incorporate The first step in forming a C Corporation is choosing the state you want to incorporate. Each state has its own set of laws and regulations that govern corporations, and some states may be more advantageous than others depending on your specific needs. Our team can help you determine the best state for your business based on tax laws, legal requirements, and more. Wherever a business is conducted is where the tax liability remains. You do not want the frustration of being sued in one state that is different from the state where the business is formed. It may take more time and effort to resolve the issue. There may be conflicting state laws that prevent you from an easy-to-implement solution. Choosing a Name for Your Corporation Choosing the right name for your corporation is an essential step in the formation process. We can help you choose an available name that complies with state requirements. We can also assist you with registering your corporation name if you plan on doing business under a name different from your legal name. Drafting and Filing Articles of Incorporation The next step is to draft and file incorporation articles with the state you plan to incorporate. These articles outline the purpose of your corporation, its structure, and other important information. Our team can assist you in drafting and filing these articles, ensuring they meet all legal requirements. Creating Corporate Bylaws and Other Governance Documents Corporate bylaws are the rules and regulations governing your corporation’s operation. Our team can help you draft bylaws and other governance documents that comply with state laws and regulations. Obtaining an Employer Identification Number (EIN) An Employer Identification Number (EIN) is a unique nine-digit number that identifies your corporation for tax purposes. Our team can help you obtain an Internal Revenue Service (IRS) EIN. Other Required Filings and Registrations Additional filings and registrations may be required depending on your business activities and the state where you plan to operate. Our team can help you navigate these requirements and ensure your corporation complies with all applicable laws and regulations. Our team will work closely with you at every step of the process to ensure that your C Corporation is formed correctly and efficiently. Contact us today to learn more about our services and how we can help you start building your business.
