re: So a C corporation is taxed twice on profit?

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I'm not an idiot we have people managing the finances.

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I'm just fricking with you.

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I just noticed after looking at the tax structure of a c corp after we changed to it that it was taxed twice and I thought that sucks cause now they'll tax the profit and then tax my dividends. It sucks but I promise you the finances are being managed fine

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Two things that make this not as bad as you think

a) Dividends are normally taxed at capital gains rates, which are lower than normal income tax.
LINK

b) If the corporation doesn't pay any dividends, but holds on to them instead, the value of your stock will go up by the amount of the dividend, but it isn't actually taxed on your end until you sell the stock - and then it is taxed at the lower capital gains rate.


If you take the top corporate tax rate of 35% and the top capital gains tax rate at 20% - that is a 1 - (1-0.35*(1-0.2) = effective rate of 48%. But again - that's only on dividends that are actually paid out to you in cash. My guess is the corporation will want to keep the dividends for the first several years until its well established - so you won't actually be paying this rate until many years from now.

I presume also you'll be receiving a salary from the company? That is deductible as an expense of the corporation. There are payroll taxes, but in the end net taxation prolly works out lower if profit is paid as salary rather than dividends.