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rvlaw
rvlaw, Attorney
Category: Business Law
Satisfied Customers: 8386
Experience:  NYC Trial Attorney 30+ years; Law professor ; BUSINESS LAW; CONTRACTS; TORTS; Arbitrator
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How does the C-Corp legal entity works from an ownership point

Customer Question

How does the C-Corp legal entity works from an ownership point of view? We are 3 friends who would like to open a C-Corp, do all of us have to provide the Social Security Numbers at the time of registration?
How do you define ones holding in a C-Corp?
Submitted: 4 years ago.
Category: Business Law
Expert:  rvlaw replied 4 years ago.

Hi and welcome to JA,

Here is a comparison between a C and and an S corporation that wil help you:

Choice of S or C Corporation They are really not that different. It depends on your situation:

1. C corp : limited liability protection; ease of raising capital; ease of adding owners and shareholders;taxed as an entity (as opposed to S); C will involve double tax (not so with an S). A coorporation may qualify as a C corpoaration without regard to any limit on the number of shareholders, foreign or domestic. It will last forever.

2. S corp: this is a flow through entity. It is not itself subject to income tax, rather the shareholders are subject to tax on their pro rata share of income based on their shareholdings. The corporation shares must be held by a resident or citizen individuals or certain qualifying trusts.

3. These corporations have their own corporate ID numbers EINs.

 

 

 

rich

Customer: replied 4 years ago.
Hi Rich,

Thank you for your reply. I am aware of the differences between C & S corps. I need informations specific to following questions:

We are 3 friends who would like to open a C-Corp, do all of us have to provide our Social Security Numbers at the time of registration? How do you define ones holding in a C-Corp?

Thanks,
Pankaj
Expert:  rvlaw replied 4 years ago.

Each is called a shareholder

You get a corporate EIN since the C Corp is taxed as an entity. Therefore, you don't have to file Social Security numbers to form the C Corp. But remember, you will have a personal return with your own Social Security number and one of the aspects of your return will be the profit or loss from the C Corp. shares which must be reflected on that personal return.

Rich

Customer: replied 4 years ago.
Thanks Rich.

Is the corporate EIN number associated with anyone's social security number?

If there is no profit/loss OR no distribution/dividends, do individual shareholders have to put in the personal tax returns?

Expert:  rvlaw replied 4 years ago.

EIN is like a corporate social security number.

As I said, each's profit or loss from the Corporation would appear in his personal 1040 just like any other income, loss, expense, etc.

rich

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