C Corporations

No. The use of the standard mileage method is limited to a self-employed individual or an employee who operates an automobile for business purposes. Corporations would not qualify. Partners in a partnership would qualify because they are considered self-employed.

No. The use of the standard mileage method is limited to a self-employed individual or an employee who operates an automobile for business purposes. Corporations would not qualify. Partners in a partnership would qualify because they are considered self-employed.

Yes. Beginning 1/1/11 you must use electronic funds transfer to make all federal tax deposits for employment tax's, corporation tax's and excise tax's. Forms 8109- and 8109-B Federal Tax Deposit Coupons can not be used after 12/31/10. Generally electronic funds transfer are made using the EFTPS system. If you do not use EFTPS you can arrange for a trusted third party to make deposits on your behalf such as a payroll service or financial institution. To enroll in EFTPS visit www.eftps.gov or call 1-800-555-4477. Speak to your local CPA about assisting you in signing up to the Federal Tax Payment System.

Incorporation can provide many benefits. The most important factor is that incorporation can help limit your personal liability as a business owner. Generally, creditors of your corporation must satisfy their claims by seizing the assets of the corporation rather than your personal assets. In contrast to a sole proprietor or partner in a partnership, you are financially responsible for all liabilities of the business, and your personal assets are subject to seizure or lien by creditors. Other benefits of incorporation can include greater tax deductions for health insurance and medical expenses, lower payments for social security tax and medicare tax, and greater opportunity to raise capital for the business through the issuance of stock.

Interest Rates for Q1 and Q2 2012 will continue to be charged as follows:
3% for overpayments (2% for corporations)
3% for underpayments
5% for large corporate underpayments
0.5% for the portion of a corporate overpayment in excess of $10k.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points.
The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point. Further, the federal short-term rate that applies during the third month following the taxable year also applies when determining estimated tax underpayments during the first 15 days of the fourth month following the taxable year

Simply stated, an S Corporation is taxed in the same manner as a partnership and is not taxed at the federal level. The income or losses and expenses flow through to the shareholders. A "C" Corporation pays tax on its profits and when the owner shareholders take profits from the corporation, the distributions take the form of taxable dividends. In effect, this is a double taxation of profits. There are advantages and disadvantages to both S Corporations and Regular C Corporations. Speak to your local CPA about the tax strategies of selecting the type of entity for your business.

Some advantages are: you have limited liability; there are easy ways to transfer ownership; there is a perpetual life and the corporation has the ability to raise capital through the issuance of stock. Some disadvantages include: there is a double taxation of profits; the entity is subject to various state and federal restrictions; and a corporate charter may restrict the types of business activities. Speak to your local CPA to determine the best entity choice to fit your needs.

A close corporation is also known as a closely held corporation. It is a corporation in which the stock of the corporation cannot be traded on a public exchange such as the NYSE, NASDAQ, etc. and the number of shareholders must be specified, and typically cannot exceed 30 and certain limitations may be placed on the transfer of stock. A close corporation can be advantageous for small businesses.