Two Types of Corporations
The IRS allows for a corporation to be taxed either as a "C corporation" or as an "S corporation."
C Corporations
A C corporation is taxed at two levels. This is commonly referred to as double taxation. A C corporation pays a corporate tax on its corporate income (the first tax). Then, the C corporation distributes profits to stockholders who pay income tax on those dividends (the second tax).
S Corporations
One way to avoid the double taxation of a C corporation is to make a special election to be taxed as a S corporation, which is pass-through entity taxed like a partnership or a sole proprietorship. That way, there is only one level of taxation. The corporate profits "pass through" to the owners, who pay taxes on the profits at their individual tax rates.
source: http://www.legalzoom.com/incorporation-guide/types-of-corporations.html
S Corporation Restrictions
To elect S Corporation status, your corporation must meet specific guidelines.
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All stockholders must be citizens or permanent residents of the United States.
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The maximum number of stockholders for an S Corporation is 75.
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If an S Corporation is held by an "electing small business trust," then all beneficiaries of the trust must be individuals, estates or charitable organizations. Interests in the trust cannot be purchased.
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S Corporations may only issue one class of stock.
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No more than 25 percent of the gross corporate income may be derived from passive income.
Not all domestic general business corporations are eligible for S Corporation Status.
Exclusions:
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a financial institution that is a bank
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an insurance company taxed under Subchapter L
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a Domestic International Sales Corporation (DISC)
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certain affiliated groups of corporations
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All stockholders must be citizens or permanent residents of the United States.
*
The maximum number of stockholders for an S Corporation is 75.
*
If an S Corporation is held by an "electing small business trust," then all beneficiaries of the trust must be individuals, estates or charitable organizations. Interests in the trust cannot be purchased.
*
S Corporations may only issue one class of stock.
*
No more than 25 percent of the gross corporate income may be derived from passive income.
Not all domestic general business corporations are eligible for S Corporation Status.
Exclusions:
*
a financial institution that is a bank
*
an insurance company taxed under Subchapter L
*
a Domestic International Sales Corporation (DISC)
*
certain affiliated groups of corporations
Types of Corporations
Businesses may choose from a variety of corporate entities, based on their needs. Below are useful descriptions.
If you have further questions, your legal or financial advisors can help you decide which type of structure best suits your business needs. While Active Filings does not offer legal or tax advice, we will help you form your new corporation or LLC in any state ... fast, affordable and high quality incorporation services.
General Corporation/ Subchapter C Corporation -
A corporation which is not a Subchapter S Corporation, A general corporation, also known as a “C” corporation, is the most common corporate structure. A general corporation may have an unlimited number of stockholders. Consequently, it is usually chosen by those companies planning to have more than 30 stockholders or large public stock offerings. Since a corporation is a separate legal entity, a stockholder's personal liability is usually limited to the amount of investment in the corporation and no more.
Close Corporation
A close corporation is most appropriate for the individual starting a company alone or with a small number of people. There are a few significant differences between a general corporation and a close corporation. A close corporation limits stockholders to a maximum of 30. In addition, many close corporation statutes require that the directors of a close corporation must first offer the shares to existing stockholders before selling to new stockholders. Not all states recognize close corporations.
Subchapter S Corporation
A Subchapter S Corporation is a general corporation that has elected a special tax status with the IRS after the corporation has been formed. Subchapter S corporations are most appropriate for small business owners and entrepreneurs who prefer to be taxed as if they were still sole proprietors or partners.
When a general corporation makes a profit, it pays a federal corporate income tax on the profit. If the company also declares a dividend, the stockholders must report the dividend as personal income and pay more taxes.
S Corporations avoid this "double taxation" (once at the corporate level and again at the personal level) because all income or loss is reported only once on the personal tax returns of the stockholders.
For many small businesses, the S Corporation offers the best of both worlds, combining the tax advantages of a sole proprietorship or partnership with the limited liability and enduring life of a corporate structure.
Source :http://www.activefilings.com/en/information/types.htm
Links:
http://www.newmagnolia.com/types.html
http://www.legalzoom.com/incorporation-guide/types-of-corporations.html
If you have further questions, your legal or financial advisors can help you decide which type of structure best suits your business needs. While Active Filings does not offer legal or tax advice, we will help you form your new corporation or LLC in any state ... fast, affordable and high quality incorporation services.
General Corporation/ Subchapter C Corporation -
A corporation which is not a Subchapter S Corporation, A general corporation, also known as a “C” corporation, is the most common corporate structure. A general corporation may have an unlimited number of stockholders. Consequently, it is usually chosen by those companies planning to have more than 30 stockholders or large public stock offerings. Since a corporation is a separate legal entity, a stockholder's personal liability is usually limited to the amount of investment in the corporation and no more.
Close Corporation
A close corporation is most appropriate for the individual starting a company alone or with a small number of people. There are a few significant differences between a general corporation and a close corporation. A close corporation limits stockholders to a maximum of 30. In addition, many close corporation statutes require that the directors of a close corporation must first offer the shares to existing stockholders before selling to new stockholders. Not all states recognize close corporations.
Subchapter S Corporation
A Subchapter S Corporation is a general corporation that has elected a special tax status with the IRS after the corporation has been formed. Subchapter S corporations are most appropriate for small business owners and entrepreneurs who prefer to be taxed as if they were still sole proprietors or partners.
When a general corporation makes a profit, it pays a federal corporate income tax on the profit. If the company also declares a dividend, the stockholders must report the dividend as personal income and pay more taxes.
S Corporations avoid this "double taxation" (once at the corporate level and again at the personal level) because all income or loss is reported only once on the personal tax returns of the stockholders.
For many small businesses, the S Corporation offers the best of both worlds, combining the tax advantages of a sole proprietorship or partnership with the limited liability and enduring life of a corporate structure.
Source :http://www.activefilings.com/en/information/types.htm
Links:
http://www.newmagnolia.com/types.html
http://www.legalzoom.com/incorporation-guide/types-of-corporations.html
Limited Liability Company
A limited liability company (LLC) offers protection from personal liability for business debts, just like a corporation. However, unlike a corporation, which must pay its own taxes, an LLC is a pass-through tax entity: The profits and losses of the business pass through to its owners, who report them on their personal tax returns, just as they would if they owned a partnership or sole proprietorship. Also, while setting up an LLC is more difficult than creating a partnership or sole proprietorship, running one is significantly easier than running a corporation.
Read more here:
Limited Liability Company (LLC) FAQ
http://www.irs.gov/businesses/small/article/0,,id=98277,00.html
Read more here:
Limited Liability Company (LLC) FAQ
http://www.irs.gov/businesses/small/article/0,,id=98277,00.html
corporations: an overview
A corporation is a legal entity created through the laws of its state of incorporation. Individual states have the power to promulgate laws relating to the creation, organization and dissolution of corporations. Many states follow the Model Business Corporation Act. State corporation laws require articles of incorporation to document the corporation's creation and to provide provisions regarding the management of internal affairs. Most state corporation statutes also operate under the assumption that each corporation will adopt bylaws to define the rights and obligations of officers, persons and groups within its structure. States also have registration laws requiring corporations that incorporate in other states to request permission to do in-state business.
There has also been a significant component of Federal corporations law since Congress passed the Securities Act of 1933, which regulates how corporate securities are issued and sold. Federal securities law also governs requirements of fiduciary conduct such as requiring corporations to make full disclosures to shareholders and investors.
The law treats a corporation as a legal "person" that has standing to sue and be sued, distinct from its stockholders. The legal independence of a corporation prevents shareholders from being personally liable for corporate debts. It also allows stockholders to sue the corporation through a derivative suit and makes ownership in the company (shares) easily transferable. The legal "person" status of corporations gives the business perpetual life; deaths of officials or stockholders do not alter the corporation's structure.
Corporations are taxable entities that fall under a different scheme from individuals. Although corporations have a "double tax" problem -- both corporate profits and shareholder dividends are taxed -- corporate profits are taxed at a lower rate than the rates for individuals.
Corporate law has important intersections with contracts and commercial transactions law.
Source: http://topics.law.cornell.edu/wex/corporations
Links: http://www.irs.gov/businesses/small/article/0,,id=98240,00.html
Blog Index
1. Shri Ganesh - start of my journey
2. FACS - Educational Evaluation
3. Wiley CPA exam review 2009 - BEC
4. the topics covered in business structure
5. how to prepare..........
6. listen to the text
7. FACS Evaluation report
8. Application sent
9. RECEIVED KAPLAN SCHWESER CPA REVIEW (BEC)
10. Received NTS
11.First time Prometric exam experience
12.Results Time
13.Why my request denied?
14. Become a student member
15. Balancing wants and needs
16. Fighting procastination
2. FACS - Educational Evaluation
3. Wiley CPA exam review 2009 - BEC
4. the topics covered in business structure
5. how to prepare..........
6. listen to the text
7. FACS Evaluation report
8. Application sent
9. RECEIVED KAPLAN SCHWESER CPA REVIEW (BEC)
10. Received NTS
11.First time Prometric exam experience
12.Results Time
13.Why my request denied?
14. Become a student member
15. Balancing wants and needs
16. Fighting procastination
The uniform partnership act 1997-article view
UNIFORM PARTNERSHIP ACT (1997)
Each article is divided into various sections. the law relating to partnership is the basis for understanding how the partnerships work. please refer to the act under the related article to understand more about the topic in a detailed way.
UNIFORM PARTNERSHIP ACT (1997) Article View
Each article is divided into various sections. the law relating to partnership is the basis for understanding how the partnerships work. please refer to the act under the related article to understand more about the topic in a detailed way.
UNIFORM PARTNERSHIP ACT (1997) Article View
listen to the text
- when you're tired enough to read, the best thing you can do is to copy the text and listen the clipboard.
- We have many text to voice softwares available over the net.
- For example one such software is deskbot
- http://www.bellcraft.com/deskbot/
- it uses Microsoft Agent Animated, Talking Characters to read to us and it is absolutely free
- You can also use text to mp3 softwares to convert your text to natural speaking and can listen when you drive, workout or walk.
how to prepare..........
When you start preparing for the exam the first thing is having a base material
• I choose my base material as Wiley , so I am reading BEC from the book.
• First read the concept from the book and then note the areas where you need further study.
• Prepare notes of important points and make flashcards at the same time.
• Don't skip any points from the base material.
• Understand the differences and revise the points from the notes and check your flashcards.
• If you don't understand any point note that point on a separate paper and clear your doubt.
• Plan ahead the timing for his study and how and when you're going to complete the modules and your research and revision.
• Revising whatever you read is very important. Plan your revisions as well.
• Taken note of the time you invested while studying some particular portion of the work. This will give you an idea how much time it will take to complete your study.
• If you prepare notes and flashcards you can revise in any spare time.
• If you don't understand any particular topic please note it and make detailed study about it.
• I choose my base material as Wiley , so I am reading BEC from the book.
• First read the concept from the book and then note the areas where you need further study.
• Prepare notes of important points and make flashcards at the same time.
• Don't skip any points from the base material.
• Understand the differences and revise the points from the notes and check your flashcards.
• If you don't understand any point note that point on a separate paper and clear your doubt.
• Plan ahead the timing for his study and how and when you're going to complete the modules and your research and revision.
• Revising whatever you read is very important. Plan your revisions as well.
• Taken note of the time you invested while studying some particular portion of the work. This will give you an idea how much time it will take to complete your study.
• If you prepare notes and flashcards you can revise in any spare time.
• If you don't understand any particular topic please note it and make detailed study about it.
the topics covered in business structure
Studying about business structure gave me idea about
1. the nature of our sole proprietor ships
2. general partnerships, limited partnerships, limited liability partnerships
3. differences between sole proprietorship and partnership, general partnership and limited partnership, limited liability partnership
4. how these business structures are formed, the rights of partners they relationship to third parties, how this partnership is terminated,
5. Corporations, limited liability companies.
6. Types of corporations, formation of corporations and their corporate financial structure, and powers and liabilities of corporation, the duties and boss of directors and officers of corporations
7. stockholders rights and liability and changes in corporate structures
Will discuss in detail about each and every topic I read
This is basically to create an understanding about what I read and to prepare notes and simultaneously prepare flash cards. They will assist me, in my revisions and as a quick reference.
1. the nature of our sole proprietor ships
2. general partnerships, limited partnerships, limited liability partnerships
3. differences between sole proprietorship and partnership, general partnership and limited partnership, limited liability partnership
4. how these business structures are formed, the rights of partners they relationship to third parties, how this partnership is terminated,
5. Corporations, limited liability companies.
6. Types of corporations, formation of corporations and their corporate financial structure, and powers and liabilities of corporation, the duties and boss of directors and officers of corporations
7. stockholders rights and liability and changes in corporate structures
Will discuss in detail about each and every topic I read
This is basically to create an understanding about what I read and to prepare notes and simultaneously prepare flash cards. They will assist me, in my revisions and as a quick reference.
Wiley CPA exam review 2009 - BEC
I received my Wiley CPA Exam Review 2009: Business Environment and Concepts yesterday
The points I noted in this book are
1. This book is designed keeping in view the content required for a computerized exam.
2. It begins with how you should start your preparation to the CPA exam, the nature of the exam, their approach, and the detailed analysis of the examination with respect to the preparation.
3. After going through the first five chapters which were very essential to understand and a more about the exam at the contents of the exam, I started reading the very first module about business structure.
4. Every concept is touched in brief not widely covered but according to them it was enough for answering the multiple choice questions but they don't give any guarantees.
5. They recommend understanding and figuring out the points where we need to do a more detailed study, but they advise us to first complete the module in the book.
6. The surprising thing about to the book is it is lean and don't scare's in first place.
7. More about the book and my preparation in my next blog.
The points I noted in this book are
1. This book is designed keeping in view the content required for a computerized exam.
2. It begins with how you should start your preparation to the CPA exam, the nature of the exam, their approach, and the detailed analysis of the examination with respect to the preparation.
3. After going through the first five chapters which were very essential to understand and a more about the exam at the contents of the exam, I started reading the very first module about business structure.
4. Every concept is touched in brief not widely covered but according to them it was enough for answering the multiple choice questions but they don't give any guarantees.
5. They recommend understanding and figuring out the points where we need to do a more detailed study, but they advise us to first complete the module in the book.
6. The surprising thing about to the book is it is lean and don't scare's in first place.
7. More about the book and my preparation in my next blog.
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