12Law Arrow 12Law Arrow  Easy Questions  
12Law Arrow 12Law Arrow Instant Legal Documents
 
 
FINANCIAL & MARITAL

Cohabitation Agreement coming soon!
Separation Agreement coming soon!
No-Fault Divorce coming soon!
Bankruptcy coming soon!
 
 

Pros and Cons of Taxation as a Corporation in Jadwin, MO

Pros and Cons of Taxation as a Corporation in Jadwin, MO


Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.
 
- Steve Jobs


A corporation is the only type of business that pays taxes on profits and is taxed differently from other business structures.

By contrast, sole proprietorships, Partnerships, and limited liability companies (LLCs) are pass through entities that report their business income profits or loss on the personal income tax returns of the owners and are not taxed on business profits like the corporation.

A corporation, as a separate tax entity from the owners, is taxed on all the profits after deducting the business expenses. The money that is kept in the company to cover expenses or expansions (retained earnings) and the profits distributed to the shareholders (dividends) are considered taxable profits.

Tax Deductible Expenses

A corporation can deduct from the taxable profits, its business expenses which is the money that the corporation spend in the legitimate pursuit of the business. The corporation can also deduct from the taxable profits all the salaries and bonuses it pays its employees (including the owners) and also the cost related to medical and retirement plans. Start-up costs, operating expenses, cost of goods sold and product advertising expenditures are also deductible expenses.

Corporate Tax Payments

IRS Form 1120 will be filed by the corporation when paying the corporate income taxes on any profits earned by the corporation. Quarterly payments can be done during the months of April, June, September, and January.

Shareholder Tax Payments

If the owner of the corporation works within the corporation, they are required to pay their own individual income taxes just like regular employees. The salaries and bonuses are considered deductible business expenses so the corporation does not pay taxes on them.

Tax on Dividends

Dividends that the corporation distributes to their shareholders are not tax deductible so they will be reported and paid on their personal income tax aside. And, the corporation is also required to pay the tax on the earnings that fund this dividend. This means the dividends are taxed twice. In smaller corporations, the owners work for the corporation as employees. The corporation pays them in the form of salaries and bonuses which are tax-deductible, thus saving them from taxable dividends. Debt payments are tax deductible, so they are a more tax advantaged source of capital.

S Corporation Taxes

S corporation refers to a corporation that elected to pay taxes like that of a Partnership or limited liability company. The corporate profit or losses of the business are passed through to the owners and reported on their own personal income tax returns, similar to LLCs.

Benefits of a Separate Corporate Income Tax

With double taxation and the extra time and effort in filing both corporate and personal taxes, it begs the question why anyone would choose the corporate structure. There are benefits that can be derived out of having a separate level of taxation. This is a complicated area and the benefits may vary depending on the individual situation.

• Manage to a lower tax rate. Owners can split profit and loss with the business for a lower overall tax rate. By managing how much of the corporations' earning are paid out in dividends to the owners, vs. kept on the corporate books as retained earnings, owners can optimize their combined tax rates. The corporate income tax rate of 15 to 25 percent on profits up to $75,000 is lower than most owners' marginal tax rates on the same amount. This is the reason why it would save money by keeping profits within the company.There is a limitation, however, with the amount of money that can be kept in the corporation which can only amount up to $250,000 without tax penalties.

• Fringe Benefits. Another advantage of forming a corporation where tax benefit is concerned is that the company can deduct the full cost of fringe benefits given to the employees; including the owners and they are not taxed on these benefits.

• Raising capital. Corporations can go public and sell stock. For that reason, venture capital companies prefer to work with corporations rather than with LLCs. S corporations, like LLCs, don't suffer from double taxation. C corporations may face double taxation, but they can have incentive stock option plans.

 
Personalize & Print a Free MO Last Will Create This Document
Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Page 9
Page 10
 
Personalize & Print a Free MO Living Will Create This Document
Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Related Legal Services near Jadwin, MO
Alessi Deborah J
400 N 5th St Ste 200
Saint Charles, MO 63301
(636) 946-9999
Attorneys,  Criminal Law Attorneys,  Family Law Attorneys,  Labor & Employment Law Attorneys,  Socia
Shea Kohl & Alessi LC
400 N 5th St
Saint Charles, MO 63301
(636) 946-9999
Attorneys,  Social Security & Disability Law Attorneys,  DUI & DWI Attorneys,  Corporation & Partner
Hearne John L
300 E High St # B
Jefferson City, MO 65101
(573) 636-9974
Accident & Property Damage Attorneys,  Attorneys,  Criminal Law Attorneys,  Family Law Attorneys,  G
Coleman Nathan
1030 SE Murphy Blvd
Joplin, MO 64801
(417) 659-9968
General Practice Attorneys, Attorneys, Legal Service Plans
Meek & Coleman
1030 SE Murphy Blvd
Joplin, MO 64801
(417) 659-9968
Attorneys
Sumner Law Group, LLC
911 Washington Ave., Suite 400
Saint Louis, MO 63101
(314) 485-9948
Criminal Law Attorneys, Attorneys
Smith Law Office LLC
400 Jules St
Saint Joseph, MO 64501
(816) 901-9909
Legal Service Plans,  Automobile Accident Attorneys,  Criminal Law Attorneys,  Divorce Attorneys,  F
Bishop & Hayes PC
630 S Northpark Ln
Joplin, MO 64801
(417) 659-9888
Automobile Accident Attorneys, Attorneys
Sticklen & Crosthwait
411 E 7th St
Joplin, MO 64801
(417) 626-9880
Personal Injury Law Attorneys, Attorneys
Smiser Law Firm
1 Crown Dr
Kirksville, MO 63501
(660) 665-9873
Attorneys
Smiser Law Firm
CROWN Drive Professional, Bldg Ste100
Kirksville, MO 63501
(660) 665-9873
Bankruptcy Law Attorneys, General Practice Attorneys, Attorneys
Childress Ahlheim Cary
1010 Market St
Saint Louis, MO 63101
(314) 621-9800
Attorneys,  Legal Service Plans,  Attorneys Referral & Information Service,  General Practice Attorn
State of Missouri
2323 N Main St
Poplar Bluff, MO 63901
(573) 840-9775
Attorneys, State Government
Burrows & Stork,
1197 S Duchesne Dr
Saint Charles, MO 63301
(636) 232-9700
Attorneys, Criminal Law Attorneys, Family Law Attorneys, Wills, Trusts & Estate Planning Attorneys,
Allan Law Offices
2117 Green Meadow Dr
Jefferson City, MO 65101
(573) 636-9667
General Practice Attorneys, Attorneys, Legal Service Plans
Mark A. Tolman, P.C.
566 First Capitol Drive
Saint Charles, MO 63301
(314) 456-9632
Family Law Attorneys,  Divorce Attorneys,  DUI & DWI Attorneys,  Child Custody Attorneys,  Bankruptc
Edwards Young & Beilenson LLP
228 N Main St
Saint Charles, MO 63301
(636) 896-9600
General Practice Attorneys, Attorneys, Legal Service Plans
Leritz, Plunkert & Bruning, PC
555 Washington Ave Ste 600
Saint Louis, MO 63101
(314) 231-9600
Accident & Property Damage Attorneys,  Attorneys,  Corporation & Partnership Law Attorneys,  Persona
The Baehr Law Firm P.C.
2511 Broadway Bluffs Dr
Columbia, MO 65201
(573) 355-9558
Attorneys,  General Practice Attorneys,  Bankruptcy Law Attorneys,  DUI & DWI Attorneys,  Bankruptcy
Graeber, Kenneth H - Uthoff Graeber Bobinett
906 Olive St
Saint Louis, MO 63101
(314) 621-9550
General Practice Attorneys, Attorneys
Weiss & Associates PC
1015 Locust St Suite 400
Saint Louis, MO 63101
(314) 588-9500
Estate Planning Attorneys, Attorneys, Business Law Attorneys, Real Estate Attorneys, Legal Service P
Weiss,
1015 Locust St Suite 400
Saint Louis, MO 63101
(314) 588-9500
Corporation & Partnership Law Attorneys, Business Law Attorneys, Probate Law Attorneys, Litigation &
John H Shock
451 N Main St
Poplar Bluff, MO 63901
(573) 778-9495
Attorneys,  Business Bankruptcy Law Attorneys,  General Practice Attorneys,  Bankruptcy Services,  B
Blaich Grace C
900 Honeysuckle Ln
Poplar Bluff, MO 63901
(573) 727-9455
Attorneys, Legal Service Plans
12Law.com   |  NASHVILLE, TN USA   |  CONTACT US