Re: Advantages of a C Corp vs. an S Corp… - Posted by Frank Chin
Posted by Frank Chin on August 26, 2003 at 10:21:34:
I’m not a CPA, but I have an LLC, C Corp, and S Corp.
As for me, the C Corp services as a management company for my RE activities, plus provide office services for the LLC. The C Corp bills the other entities for services performed.
At the beginning of the tax year, a projection is made of benefits (medical, co-pay etc.), compensation for the upcoming year, and the the appropriate intercompany billing scheme is devised. Purpose?? Revenues will roughly equal expenses by year end, thus no income. Ergo, no double taxation for the C Corp.
Thus, this sliver of income will enjoy the benfits of the C Corp. The balance of the P&L stays within the S Corp, and LLC etc, and taxed accordingly.
With Quickbooks, and its memorized transaction feature, the intercompany billings are handled quite automatically. I make a monthly deposit into the C Corp when I deposit the rent checks.
Yes, I have to do another set of tax returns at year end, which takes me about two or so hours with Turbo tax, with the data exported from Quickbooks. CPA’s around here in NYC charge $700.00 minimum for each Corp entity, and Turbo Tax saves me a bundle. I also tried out “Tax Cut” put out by H&R Block.
To cover myself, I wrote an agreement between the entities as to what the billing is, and the work to be performed. For instance, for REI activities, the C Corp charges a fee equal to 10% of the rent roll.
If I have unexpected expenses, the C Corp will perform some additonal work, and invoice according to the agreement.