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Idaho C-Corporation General Summary
An Idaho C-Corporation can have huge advantages to pass-through entities as to greater fringe benefits. As employees, owner-employees of a C-Corporation qualify for certain employee fringe benefits.
Example: Health insurance can be wholly tax-free to C-Corporation owner-employees (through full deduction by the C-Corporation and full tax exemption for the owner-employee).
Another advantage of the C-Corporation is that they are less likely to be subject to passive loss deduction limitations. These limit the opportunity to deduct losses from activities the taxpayer doesn’t “materially participate” in, against income from investments or other businesses.
Another tax disadvantage of C-Corporation status is its limited ability to report for tax purposes on the cash method of accounting, which generally defers tax as compared to the accrual method.
Idaho C-Corporation Facts
An Idaho corporation is a legal and separate entity from its owners. Because it’s a legal entity, it can be taxed, sued, enter into contracts and borrow money.
- The owners are known as shareholders.
- The shareholders elect a board of directors to manage the company.
- The corporation has a life of its own and does not dissolve when ownership changes.
- C-Corporations can be owned by one or more shareholders.
- The C-Corporation allows owner/shareholder-employees to receive the most amount of tax-free fringe benefits out of all business entities.
- C-Corporations can issue multiple classes of stock with an unlimited number of shares.
- Any entity, including individuals, LLCs, and other S and C-Corporations, can be a shareholder. C-Corporations have the least number of rules relating to ownership of shares.
- C-Corps can easily transition from a closely held corporation to a thriving stock on publicly traded markets.
- C-Corporations can retain earnings for future growth after the 21% corporate taxes are paid.
- Distributed profits are paid out to owners/shareholders through a dividend (1099-DIV) form.
C-Corp Common Fringe Benefits
Idaho C-Corporation Common Fringe Benefits
The C-Corporation allows owner/shareholder-employees to receive the most amount of tax-free fringe benefits out of all business entities.
C-Corporations are allowed to offer their owner/shareholder-employees a plethora of fringe benefits. These benefits are considered business expenses and not taxable income. As long as the plan is nondiscriminatory, the reimbursements are not taxable to the employees.
When ready to form these types of fringe benefits, a nondiscriminatory plan will be spelled out in the Bylaws. If you are afraid of offering too much to your non-owner/shareholder-employees, then you can include a more difficult to obtain fringe benefit requirement.
No Two-Percent Rule
C-Corporations do no limit tax-free fringe benefits its owner/shareholder-employees for those who own more 2% like an S-Corporation. A C-Corporation receives full deductions for the cost of employees’ (including owner-employees) health insurance, group term life insurance of up to $50,000 per employee, and even long-term care premiums without regard to aged based limitations.
If one has a small corporation and a lot of medical expenses that aren’t covered by insurance, the corporation can establish a plan that treats all expenses as tax deductible. Fringe benefits such as employer-provided vehicles and public transportation passes are also deductible.
Common types of fringe benefits:
- Health insurance premiums
- Long-term-care and disability insurance premiums
- Medical reimbursement plan
- Education Assistance
- Company-owned cars or other vehicles
- Moving and Housing Benefits
- Retirement plans
- Memberships in fitness clubs
- And many more….
C-Corp Avoiding Double Taxation
Avoiding Double Taxation
The IRS taxes the profits of an Idaho C-Corporation at a corporate tax rate of 21%. Then, if the C-corporation pays dividends to shareholders, the IRS taxes those dividends again at a lower qualified dividend rate of 15-20%. However, this double taxation occurs usually when improper tax planning has occurred or when non-working shareholders need the value of their Dividends paid out.
To avoid this issue, pay yourself or active members a reasonable salary, then use the rest for fringe benefits, retirement and insurance. If there is more money than you can burn up, utilize the additional funds for your Corporation to invest in future growth and acquisitions. Remember that a corporation can own investments just like a human, along with vehicles, property and other useful items.
C Corporation Packages
Articles Of Incorporation
Federal Tax ID Number (EIN)
Self-Customizable Bylaws & Forms
Certificate of Existence
One Assumed Business Name "DBA"
199A 20% Business Income Tax Deduction Book
Expedited Electronic Documents by Email
All Filing Fees Included
Expedited Filing Services
High Quality Linen/Cotton Documents
Shipping Fees of Documents Included
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