Can Form 1120 C Pros 2023-2024

Welcome back to the rough. I'm with Lloyd, a tax professional with the CPA firm Aster and Quarries Reiden and Morgan. Let's talk briefly about the different types of ways to incorporate, specifically C corporations. The advantage of having a C corporation is the unlimited number of shareholders you can have. Many businesses that eventually plan to go public will set up a C corporation. They also have unlimited life. There are medical reimbursement plans that are more advantageous for a C corporation compared to an LLC or an S corporation. I also know that the tax rate on the first $75,000 is different if people are not going to take the money out and are trying to build up retained earnings. Having a lower tax rate at the C corporation level is a benefit. One detriment is that if there is a loss at the C corporation level, they cannot utilize it. It gets carried forward for future gains or can be carried back if they are already in existence. Some significant disadvantages include the requirement to ensure that the corporation zeros out every year to avoid potential double taxation. Shareholders may also have to take out a salary if they are trying to zero out the corporation and have exhausted all other efforts. They will have to pay Social Security on up to $110,000 of their income and the Medicare tax will continue. In contrast, an S corporation does not have to pay Social Security and Medicare tax on dividend income. For example, if you have a profit of $10,000 or $20,000, you have to take that money out by the end of your tax year or it will be taxed at a certain rate. When you do take the money out as income, it will be taxed...