About Model C-Corp

Understanding the differences between the Corp and LLC model when starting a company in the US is extremely important. Each of the types has particularities and benefits according to your objective when starting the enterprise.

The Corporation type of company is a format where, obligatorily, there must be a hierarchy of shareholders, directors and directors.

There are two types of companies Corporations, S-Corp or C-Corp. In the first option, members must be legal residents of the United States, while C-Corp allows opening with members from other countries.

Speaking now about taxation of the C-Corp model, this company format needs to make federal and state income tax payments. Depending on the state, the amount of tax may vary. However, personal income tax only needs to be paid if profits are distributed, which is not mandatory for a C-Corp.

A major tax advantage of the C-Corp model is when the company records a loss in a given year. This loss can be accumulated for the following years, reducing the tax burden.

A C-Corporation also allows for credit building on behalf of the company itself, unlike an LLC which depends on its partners building credit, which can make getting credit very difficult for non-US residents.

Opening a C-Corp company in the United States is a great solution if one of your objectives is to obtain investments, this model is more suitable for receiving capital from third parties.

As a disadvantage, the main point is double taxation. First, taxes must be paid at the corporate level (federal and state), then income tax will be levied on the distribution of profits at the personal level.

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Similarities between C Corp and LLC companies:

- Both can be transferred to other people or companies, following the rules of each state.

- Both have an indefinite duration, not needing to be terminated in cases of absence or death of the partners.

- LLC's can become C Corp's and vice versa, according to the rules of each state. Both can also be transferred to another state.

- These two models have partial liability protection for individual members in case of legal or financial problems.

Do you understand the difference?

Now that you know the differences between the models, count on America Expert to open the company in the United States in a simple, fast and safe way.

Just follow this form filling out all the information to count on our support in opening your company.

If you have any questions and need to speak with one of our consultants to better understand which model is most suitable for your business, contact us.