Business Transactions

Corporations (INC)

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In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. A corporation can also take special deductions. For federal income tax purposes, a C corporation is recognized as a separate taxpaying entity. A corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders.

The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. This creates a double tax. The corporation does not get a tax deduction when it distributes dividends to shareholders. Shareholders cannot deduct any loss of the corporation.

Click one of the links below for additional information about the different types of business that are available:

• Limited Liability Company (LLC)
• S Corporation
• Limited Liability Partnership (LLP)
• Sole Proprietorship

For information about how to start a new business or to protect your business investments, contact Coastal law today. Our goal is to provide businesses with the knowledge needed to succeed.