Corporation Learning Center
When you incorporate a business, you are going to have a lot of questions about how it works, what you need to do, and when you need to do it. The corporation, or corp, or inc, is a popular type of entity filing, and there are a couple of different ways that it can be filed. The two types of filings are: C-corporation and the S-corporation.
What is a Corporation?
The Corporation is basically an entity that will provide its owner with some added benefits that are granted once the filing is setup. The company, or Corp, once formed is just one of the first steps that a business will typically go through. There are a lot of challenges for the business owner, so we've put together this information to make the process a little easier. So, let's talk about a couple of general benefits of the Incorporation:
- Limited Liability Protection
- Pass through taxation (only for the S corporation)
- Sell shares to investors, and raise capital for the business
In this section, we will address some of the frequently asked questions about corporations.
- Why Incorporate a Business? - Many small business owners incorporate for the limited liability protection, and the pass through taxation( S-corps only)
- What are the Bylaws? - The corp will need to have bylaws. The Bylaws represent an agreement by the shareholders as to how they will operate the business and also handle certain situations that may arise.
- How can a corporation build credit? - Most new corporations don't have much business credit, and very small business may find that the owner may have to personally guarantee all business activities. But, when you start out, you will want to push to have your business tax ID used in place of your personal tax id.
All business owners care about taxes, or they should care about them. This section will serve as a primer for your LLC taxes.
- How do corporations get taxed? - Each year, your accountant will go over your income & expenses and overall business profit. Ultimately, they will work with you to calculate the overall taxable profit. The taxable profit will be used to calculate the total taxes due for the year.
- Does the Corp Have different tax classifications? - Yes, there are a few different tax classes. The two primary ones are the S-Corporation and the C-Corporation. The S-corp is a pass through entity, and the C-corp is a stand alone entity.
- What is the tax rate of a corporation? - The tax rate will be dependent on many factors, including the state that you are located in and the amount of income that you have earned.