c-corps pay taxes at the corporate level first. after that, individual shareholders pay taxes on dividends paid by the corporation. this opens up certain shareholders to double-taxation.
the prospect of double taxation daunting, but it is an avoidable problem. let's examine how it works: first, a c-corp doesn't pay taxes on every dollar it earns. rather, c-corps deduct their operating expenses from their revenues, reducing the business's taxable income. so if a company brought in $100,000 in revenue for a fiscal year but spent $65,000 in operating expenses, the taxable income of the business is $35,000, not $100,000.
secondly, shareholders in a c-corp only get taxed if dividends are distributed to them by the company. if a c-corporation chooses not to provide dividends to shareholders and instead retain profits, double taxation is avoided since no dividends exist. in other words, only if a c-corp makes a profit and distributes dividends to shareholders will double-taxation come into play.
all c-corps are required to complete and return irs form 1120. this informs the irs of your c-corp's income, gains, losses, deductions, credits and income tax liability.
if you're not sure a c-corp is right for you, feel free to read our article about how s-corps are taxed or the differences between s-corps and c-corps. you can also visit our 世界杯2022赛程时间表最新 for more information.
this article contains general legal information and does not contain legal advice. 2022世界杯32强抽签时间 is not a law firm or a substitute for an attorney or law firm. the law is complex and changes often. for legal advice, please ask a lawyer.
