When registering a company with the government and the state, it's important to make sure the business plan demonstrates the company structure. The most important work you can do when choosing structure is deciding what type of company to use. A C-Corp is, of itself, its own entity. It has its own tax ID and files its own return. As well, a C-Corp pays its own taxes based on profits. The C-Corp can pass through profits as dividends to those who own shares of it but, unlike an S-Corp, is not required to.
The C-Corp modifies the business plan as most companies will not select this type of company versus an S-Corp or LLC. Small business corporation formation is critical to the business planner as the effect of taxes can very much alter the net profit, and in turn, the return on equity for shareholders.
One of the benefits of a C-Corp is its ability to go public. Meaning, LLCs and S-Corps cannot be publicly-held entities, while a C-Corp can be. While this should change much for those writing a business plan, it can be something to consider if the business has the potential to grow to a level where a public buyout is an option.
There are many ways to set up the C-Corp in terms of board of directors, by-laws, partnership agreements, etc. A good attorney should be able to walk you through the proper way to structure your organization for maximum control, and maximum tax relief. When writing the business plan, it is most important to make sure that you have calculated the corporate tax correctly based on the type of business you wish to begin. There are seldom reasons to choose a C-Corp for micro-businesses, but it's always wise to make the business plan project for all contingencies up to 5 years.
Have questions? Please give us a call at the number above.
Fill out the form below and a plan advisor will respond shortly.
Work Her Way by Carolyn Kepcher Carolyn Kepcher of The Apprentice fame has used MasterPlans on two occasions.
Skout Natural by Jason and Denny Pastega Skout Natural received a $200,000 bank loan. Trailbars are flying off the shelf.
Senior Homestyle Living© by Ron Cheney Raised $20MM-$250MM in capital for a replicable elder care development in Texas.
Conductor by Seth Besmertnik and Jeremy Duboys Conductor received $2,600,000 in Venture Capital and expanded to 70 people.