S vs. C Corporation
Nevada incorporation and LLC formation is simplified because
of Nevada State laws. Whether you are an S or C corp because
of the relatively low fees and ease of filing of the necessary
forms, Nevada is the preferred state to incorporate in
due to the absence of state income taxes creates a unique
environment that is unrivaled in any other state. The
following rules generally apply to S & C corporations
in all 50 states:
S Corporation
• Allows for limited liability of the owners/officers/directors
• Typically runs on a calendar year
• Full disclosure of corporate owners
• Profits pass through to the individual tax return
1140
• It may only have one class of stock
• More corporate tax because all profits are taxed even
if you do not distributed
• State taxes will apply for individuals who are located
in a state with an individual who are located in a state
with an individual state tax
• It must be a domestic corporation formed in the USA
It may have no more than 35 shareholders
• It may only have individuals, estates or certain trusts
as shareholders
• It may not have nonresident (outside Nevada) alien
shareholders
C Corporation
• Allows for limited liability of the owner/officers/directors
• Runs on a fiscal year which may be designed by the corporate
principals
• In Nevada no disclosure of corporate owners
• Profits taxed at corporate rates on an 1120 Tax return
• Profits can be kept as retained earnings
• Nevada has no state taxes or corporate tax of any kind
Most people do not fully understand the differences between
the different types of corporations available to them.
The determining factor in deciding weather to open an
s vs. c corporation is if you plan on going public or
not. Between the two (s corp. or c corp.), there are many
differences, both allow limited Liability for officers,
owners, and directors. The two run on different types
of yearly scenarios. The c corporation runs off of a fiscal
year and an s corporation runs off of a calendar year.
The type of corporation you are in will affect the corporate
owners, directors, and officers greatly. One of the most
significant things about owning your own corporation is
the tax benefits. Depending on the type of company you
establish or operate, the tax scenario could improve significantly
if you incorporate with the correct type of corporation.
Nevada corporations receive more tax returns due to the
fact that that there is no state taxes for
income.
