QUESTION
What type of business would earn profit that is not considered part of my personal income?
Asked on Dec 03rd, 2014 on Business Law - Illinois
More details to this question:
I am wanting to found a company by myself, but I don't want the money that is made from business proceedings to count as part of my personal income. I want the business profits and losses to be relevant to the business alone. I will invest in it with my own money, but I am not sure what type of business to make it.
1 ANSWER
The profits of c corporations are not considered income to the shareholders until and unless they are distributed in the form of dividends or otherwise. However, the corporation would be taxed on this income. In fact, one of the major drawbacks to using the corporate form is that there is double taxation - the corporation pays tax on its profits, and the shareholders then pay tax again when those profits are distributed to them.
Answered on Dec 03rd, 2014 at 9:10 AM