A corporation is simply a legal entity that anybody can register. You could have one tomorrow morning if you wished.
I do own a corporation, even if I’m alone. It’s just that I own all the shares and equity privately. I’m also a business owner because I run a business with that corporation. But a business owner can also run a business without a corporation if he chooses to.
Now, you can do a lot of things with a corporation depending on your goals and aspirations. It has different rules, laws and purposes than a normal employee or a self-employed individual.
Examples: hire people, tax benefits, grow larger, own assets, sue and be sued, raise capital, loan/borrow money, go public, etc.
I wouldn’t say higher but it is definitely different.
You might need to pay more tax because of double taxation. You are your own entity and the corporation is also an entity. This means that the corporation has to pay taxes on profits and you also have to pay taxes personally on the salary/dividend that you recieve.
But there are also other tricks to reduce or optimize taxes like tax reduction on business expenses.
When you’re a business owner, you can usually optimize to pay the least amount of taxes possible with the help of an accountant. Things that you have less control when you’re an employee.
When you hear large corporations and rich people not paying much taxes (if not at all), some are just being smart with their business and accountants.
A corporation is simply a legal entity that anybody can register. You could have one tomorrow morning if you wished.
I do own a corporation, even if I’m alone. It’s just that I own all the shares and equity privately. I’m also a business owner because I run a business with that corporation. But a business owner can also run a business without a corporation if he chooses to.
Now, you can do a lot of things with a corporation depending on your goals and aspirations. It has different rules, laws and purposes than a normal employee or a self-employed individual.
Examples: hire people, tax benefits, grow larger, own assets, sue and be sued, raise capital, loan/borrow money, go public, etc.
A corporation is what you make of it.
Guess I misunderstood the terms, then. I also thought corporations were taxed higher, is that not the case?
I wouldn’t say higher but it is definitely different.
You might need to pay more tax because of double taxation. You are your own entity and the corporation is also an entity. This means that the corporation has to pay taxes on profits and you also have to pay taxes personally on the salary/dividend that you recieve.
But there are also other tricks to reduce or optimize taxes like tax reduction on business expenses.
When you’re a business owner, you can usually optimize to pay the least amount of taxes possible with the help of an accountant. Things that you have less control when you’re an employee.
When you hear large corporations and rich people not paying much taxes (if not at all), some are just being smart with their business and accountants.