A C-corporation is any corporation that is taxed under Subchapter C of Chapter 1 of the Internal Revenue Code. The majority of major companies file as C-corporations. If a corporation fails to meet even one requirement of a S-corporation, they must file as a C-corporation.

C corps are viewed as separate business entities from their shareholders and directors, and thus receive the benefit of limited liability. Unlike S-corporations or LLCs, the income of a C corp. is taxed under Federal income tax laws. C-corporations cannot pass through income and losses to shareholders. Due to this C corps face what is referred to as double taxation, meaning that they will be taxed as a corporation and later as an individual.

However, C-corporations face less restrictions than S-corporations. They can have an unlimited amount of shareholders and are free to have multiple classes of stock. They can have shareholders who are not US residents, and they are eligible for a dividends received deduction.

Talk to me before you decide whether or not a C-corporation is the right business entity for you. Every business has a unique situation, and I can help you determine what choice would best suit your needs.

About MEDOWS CPA, PLLC: We are a boutique CPA firm located in New York City  (Manhattan), dedicated to helping small business owners and individuals.  In addition, we also provide CPA services to people outside of the state and country.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique,  Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

I often consult with would-be business owners looking for advice on taxes, funding and setting up their accounting processes.

What many of them don’t know is that they should start out with a business plan, particularly if they will be seeking outside funding in the form of loans or investments.

The business plan does not have to be extensive or lengthy. It can start with a two- or three-page executive summary and run no more than 10 or 12 pages total.

It should set out the company’s objectives and what kind of business it is up front. It should also state explicitly how much money the company will need, over what period of time and how the funds will be used. Don’t pull a number out of thin air: Do some research to figure out what kind of startup capital you’ll need – and then double it to cover all the unforeseen circumstances that inevitably occur during startup.

Keep your writing simple and avoid vague or unsubstantiated statements in your business plan. You can’t assert, for example, that “revenues will double” during your first year of operations without backing up that assertion with reasonable projections.

Include a section on your competition, market research into your industry and product or service and solid financial documents proving your company has a good shot at achieving return on investment within the period of time you’ve specified.

An accountant who specializes in small business – like me – can help you prepare the financial statements and review your business plan before you take it to investors or lenders.

You can also take a business plan workshop at your local Small Business Development Center, http://www.sba.gov/aboutsba/sbaprograms/sbdc/index.html, SCORE office, http://www.score.org/ or university entrepreneurship seminar.

Find additional resources at the library, bookstore or online, including step-by-step books on how to plan a business and sample business plans for various industries.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

About MEDOWS CPA, PLLC: We are a boutique CPA firm located in New York City  (Manhattan), dedicated to helping small business owners and individuals.  In addition, we also provide CPA services to people outside of the state and country.

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

Many potential business clients have asked me about entity selection. I hope the following is helpful:

The first major decision facing entrepreneurs is what kind of legal entity to establish for their businesses. That decision is complicated matter with profound tax consequences, so make sure you talk to a professional (hopefully our firm) about your choices.

There are multiple business structures, each with their own pros and cons. For instance, entrepreneurs who incorporate get the prestige factor of having an “Inc.” after their business name, and they enjoy limited protection from personal liability for their companies.

However, but the annual expenses and paperwork required for a corporation makes it too expensive and time-consuming for some small companies. Here are some common business entities:

Sole Proprietorships and General Partnerships: These are the simplest and least-costly business entities. Many home-based and micro-business owners operate as sole proprietorships. Income generated by these entities is “passed through” to the owners and reported as income on their personal tax returns, so the business itself pays no federal income tax. The downside to these forms of doing business is that the owners do not get any personal protection from liability if their business is sued.

Limited Liability Companies: This is a relatively new legal entity that offers some liability protection for the business owner but also operates on a pass-through basis, saving the owner from paying both business and personal income taxes.

S-Corporations: These corporations operate for tax purposes identically to pass-through entities such as general partnerships. S-Corporations are not subject to federal corporate income tax, though there may be state tax on their income. S-corporations are limited in their number of shareholders and are allowed to have only a single class of stock. If formed and operating correctly, they do offer liability protection for owners.

C-corporations: Companies with large numbers of shareholders and different classes of stock typically incorporate as C-Corporations. Unlike S-Corporations, the C-Corp is subject to tax on its income when earned, plus its shareholders are taxed on the corporate income when it is distributed to them.

Talk to an me about your business before you decide which business entity to operate under. There’s no “right answer” for everyone when it comes to forming a business entity.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

About MEDOWS CPA, PLLC: We are a boutique CPA firm located in New York City  (Manhattan), dedicated to helping small business owners and individuals.  In addition, we also provide CPA services to people outside of the state and country.

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com