C-Corp

The tax burden on a C-Corp. is less favourable than on an LLC, LP, LLP or partnership, because a Ltd. is taxed on its profits both at company level and at shareholder level. At the first level, the profits made by the company are taxed. At the second level, the dividends the shareholders receive from the company are taxed.

The FEDERAL tax structure for a C-Corp is as follows:

1. 15% on taxable income up to $50,000
2. 25% on taxable income from $50,000 to $75,000
3. 35% on taxable income over $75,000

All companies in the USA must pay federal income tax, regardless of whether or not they are incorporated in Delaware, Florida or another advantageous state. In addition, most individual US states, e.g. New York, California and Texas, also require payment of state tax of around 8–9% and local/city tax of around 1–2%. A C-Corp. is then taxed at a second level when it pays out its profits as dividends. In this second step, the dividends are taxed at shareholder level, usually at a rate of 15% (US or EU residents) or 30% (offshore). A C-Corp must register with the tax authorities in the USA and in the individual US states in which it operates, and must pay tax on the profits it generates through regular or more permanent activities in that state or country. If you need a tax return preparation service, please contact us via the contact form.