Today’s post marks the last in a series about the types of home business you can choose from, guided by a Taxgirl guest post on Problogger. It is important to carefully consider your needs, as well as the tax advantages offered by each type of home business. Consulting with a tax attorney or an accountant can be of great benefit as you make your decision. Today’s post is about the C corporation.
C corporation
Most big companies have a structure known as a C corporation. If you plan to expand your home business to something very large, this might be a good idea. But for most small types of home business, the C corporation doesn’t offer any real advantages. This is because, unlike the other types of home business, a C corporation is not a "pass through." Taxgirl points out the advantages and disadvantages of a C corporation:
The advantages of a C corporation are continuous life, clear
divisibility of assets between personal and corporate, limited
liability among shareholders, freely transferable shares of stock,
virtually unlimited options on structuring stock ownership, and
favorable tax treatment for certain expenses. All good, right?
The disadvantages of a corporation are increased administrative
expenses, compliance formalities and the potential for “double
taxation.” Increased administrative expenses are due to more
complicated accounting and tax compliance (i.e. filing corporate
returns).
The bottom line is that for most people operating a home business, there are plenty of other options that are more likely to work better.
Other posts in this series:
Sole Proprietorship
General Partnership
Limited Liability Partnership
Limited Liability Company
S Corporation
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