In today’s businesses, Executives’ needs simply will not afford them to spend the next three years building credit. Seasoned Corporations identified by Credit Build were previously formed, have an established number in the bureau, and are in good standing. Unlike shelf corporations that were never used, Seasoned Corporations have an established history that provides executives with corporate profiles, credibility, access to immediate and funding options, and contract opportunities.
Credit Build performs an extensive background check on each corporation to ensure they are free of suits, negative credit, IRS liens, and more. The Corporations are not being used and are available for purchase. The new owner instantly gains years of credibility in business in 5 days rather than 3 years.
There are several reasons a business owner may purchase a Seasoned Corporation. The Seasoned Corporations provide years of stability which allow the new owner to engage in business contracts, establish more credit, purchase real estate and equipment, access operating capital, and enter into professional agreements as an established company without having to go through the long waiting period associated with creating and building a newly established corporation.
Businesses miss current opportunities because they lack the years that credit consumers, contractors, and banks seek when choosing reputable established businesses. Most creditors are less likely to extend credit to new or start-up corporations. For this reason, newly established businesses are at a disadvantage in a competitive market, regardless of their skills.
By presenting the company as an established business with verifiable history, accessing credit lines, banking relationships, leasing agreements, and capitalizing on other financial and business opportunities are now options.
Lenders typically prefer to lend to businesses that are 3 years or older. Purchasing a seasoned corporation that is between 3 and 7 years old can drastically increase the opportunity to secure funding and procure contracts to grow the business. There are advantages to owning multiple corporations.
2018 Federal Tax Law Changes
The 2018 tax law changes show that one of the only ways left to save on federal taxes is to own businesses. A business can write off, within certain limits, things like interest, travel expenses, the purchase of business-related items, and rent. The new law heavily favors almost all types of business formations. Here are some of our tips on how to benefit from the new tax law:
Types of Corporations
The tax on C-corporations was cut from a high of 39% to a flat 21%. A C-Corp is the only type of company you can leave money in and not pay personal taxes on it, while that money remains in the company. So, this type of company is a good way to build up money to purchase other companies, purchase high ticket items, or increase the capital of the company. And if you incorporate in Wyoming, there would be no state taxes on the money that you leave in the C-Corp. Keep in mind that if you take profits out of a C-Corp in the form of dividends, you will also pay personal taxes on that money.
It appears that having more than one entity may be the best way to take advantage of the new tax law.
The new tax law allows some owners of S-Corps a 20% deduction of qualified business income, thereby lowering your personal tax rate on that income by about 5%. There are several limits on this deduction, and you will need to talk to your CPA to see if you can take the deduction. But, for some business owners, this is a good new tax break.
An LLC can elect to be taxed as a C-Corp, S-Corp, Partnership, or Sole Proprietorship, so any of the tax breaks talked about above can be used with an LLC. Partnerships and LLCs taxed as Sole Proprietors can possibly use the 20% deduction of qualified business income as well.
It is important to note that if you’re involved in multiple businesses, you determine the qualified business income of each one separately, and you first figure the deduction, subject to any limitations, on each business.
Limited liability corporations are similar to corporations in the liability protection they provide their shareholders. LLCs require less paperwork and reporting to government agencies than other forms of organizations. They also offer more flexibility in the ownership structure. The company can choose the profit-sharing arrangement that best suits its owners. Income is passed through to the shareholders via Schedule K-1. No annual board meetings or minutes are required.
- Nonprofit Corporation
Corporations that perform charitable activities may be able to qualify as nonprofits under Section 501(c) of the Internal Revenue Code. The corporation may not distribute earnings to its members, officers, or directors. It may earn income from activities not related to its main charitable purpose, but those earnings are taxable. The company must file Form 8718 and Package 1023 to apply for nonprofit status. Upon approval, nonprofit corporations are required to report their annual income on Form 990 and pay tax on any nonexempt income.
If you are interested in learning more about what we can do for you, please feel free to contact us anytime.