Key Takeaways:
- Tax Structure Variations: C Corporations are taxed at the corporate level, unlike S Corps and LLCs, which pass profits and losses directly to their owners.
- Double Taxation Risk: C Corps face double taxation—once on corporate profits and again when those profits are distributed as dividends to shareholders.
- Compensation Strategy: Shareholders who are also employees can reduce double taxation by receiving salaries, which are deductible to the corporation.
- Separate Tax Filings: C Corps file Form 1120, and their profits/losses don’t pass through to owners unless distributed.
- Loss Limitations: Corporate losses stay with the C Corp and cannot offset shareholders’ personal income, unlike in pass-through entities.
Chapters:
Timestamp Summary
0:00 Exploring the Benefits of C Corporations for Entrepreneurs
2:05 Tax Differences Between C Corps, S Corps, and LLCs
4:54 Avoiding Double Taxation Through Strategic Income Distribution
6:08 Understanding C Corp Tax Implications and Shareholder Considerations
8:20 Exploring C Corp Benefits and Strategic Financial Planning
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Phillip Washington, Jr. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
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