A C corporation represents a classic type of entity. The law treats a C corporation as a separate taxable entity, meaning it pays income tax, at corporate rates, on its net profits. Additionally, as long as its owners respect the corporate structure and do not co-mingle assets, hold requisite meetings, and meet other legal requirements, it provides asset protection.
Another type of corporation, a Subchapter S corporation, typically does not pay federal income tax. The corporate shareholders pay tax on any profits regardless of whether the corporation makes any distributions. Despite its “disregarded” tax status with the IRS, an S corporation still provides shareholders with asset protection if they follow the same legal requirements as listed for a C corporation. If the owners of C and S corporations do not follow the legal requirements, courts may use a legal concept called “piercing the corporate veil” to hold them accountable for corporate actions and debts, as appropriate.
An experienced business attorney and tax attorney at The McGuire Law Firm will work to educate you on how to meet all legal requirements to maintain asset protection.
In addition to entity structure there are various other methods that exist to provide individuals and businesses with asset protection. A business attorney or tax attorney at The McGuire Law Firm would enjoy discussing these various options, including corporations, other entities, and trusts, with you to create a customized plan to meet your goals.
If you are looking for immediate assistance with your specific tax situation, please give us a call to speak with an attorney today.
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