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Every corporation when formed is a
"C" Corporation and is subject to corporate income taxes, unless that corporation elects to be treated for
tax purposes as an "S" Corporation.
All corporations, whether a regular "C" corporation or an
"S" Corporation have 4 basic characteristics:
1. Limited Liability for the shareholders. Compare this
to a sole proprietorship or a partnership where the owners are personally liable for
the debts of the business.
2. Centralized
Management. The Board of Directors is appointed by
the founding shareholders. The Board of Directors are then responsible
for delegating the daily management of the business to the officers of the
corporation, such as the president, vice presidents, the secretary and the
treasurer.
3. Continuity of
Life. Corporations do not end when an owner dies,
as is the case with partnerships and sole proprietorships.
4. Free Transferability of
Interest. Corporate ownership is
evidenced by shares which can be sold or transferred (with restrictions for
professional corporations).
Income Tax Rates for all "C" Corporations are as follows:
-15% on the first $50,000 of profit
-25% on the next $25,000 of profit
-34% on the next $25,000 of profit
-39% on taxable income from $100,001 to $335,000
-34% on taxable income from $335,001 to $10,000,000
-35% on taxable income from $10,000,001 to $15,000,000
-38% on taxable income from $15,000,001 to $18,333,333
-35% on taxable income over $18,333,334
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