Why Is a C-Corp Taxed Differently Than an LLC or S-Corp?

Unlike other business structures, C-Corp taxation is significant in that corporations are taxable entities. Corporations are taxed like an individual and contribute according to corporate income, and then again on shareholder tax returns. This is commonly called ‘double taxation’.

Conversely, limited liability companies (LLCs) and S corporations enjoy pass ‘through taxation’, which means the business itself does not pay taxes; all profits and loses are reported by the individual owners/members of a business on their yearly income tax return.

C-Corp taxation is also very complicated and often requires several billable hours with an accountant or attorney. Keep this in mind as you decide on which type of entity is best for your business.

Other Corporate Considerations

If you decide to establish a C-Corp you will also need to submit articles of incorporation, sometimes called a certificate of incorporation, or corporate charter. These are filed with the Secretary of State, or similar state agency, depending on where you live.

Furthermore, all corporations are required to obtain an Employer Identification Number, or EIN for short. This unique tax ID is used by the Internal Revenue Service (IRS) to track the company’s tax obligations, and allows the business to establish a payroll for employees.

How to Apply for an EIN for C-Corp

There are several ways to apply for an EIN for C-Corp; the fastest and easiest way is to apply online.

Online applications are expedited quickly, usually within 24 hours*. You can start using your EIN as soon as you get it. You can also apply by mail or by phone, but these methods can take up to two weeks to be completed.

*Most EINs are processed same or next business day, unless bundled with state formations, processing times will vary.

C-Corp taxation may be the best fit for your business. If you decide to establish a corporation, be sure to apply for an EIN for C-Corp once you’ve established your business.

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