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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28389
Experience:  Taxes, Immigration, Labor Relations
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So say that we have a c-corp operation abc. And we want to

Customer Question

So say that we have a c-corp operation abc. And we want to use abc to help fund the business ventures of Def in another state. Can the c-corp be owner and Def the "dba". IN order to help fund the setup of def? We want to save paperwork, and bookkeeper time, and tax liabilities as well. Would it be best to take a draw from the corporation as owners? And then reinvest it into def? I need help on a proper approach. That don't break us.
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
C-corporation may own another entity Or it may act on its own.C-corporation may act as DBA - but that woudl not create Any separate entity - that woudl be just another name for the same C-corporation.If you want to have a separate entity - the best approach woudl be to register an LLC in that state. As a single member LLC - all income and expenses woudl be still reported on C-corporation income tax return - but that LLC woudl be a separate legal entity that may own assets, hire employees, etc.Either approach is good - and in each - taxable income will be taxed fro that C-corporation regardless if reinvested or not.More complicated structure woudl involved to register another corporation fully owned by that existed C-corporation - and each corporation woudl generally pay its own corporate taxes.But to reduce overhead - registering an LLC specifically for that another state woudl likely be a better option.
Expert:  Lev replied 1 year ago.
The advantage of such planning woudl be- a single member LLC is created under the state law where it will operate - it will have its own name, might have own bank account, etc . - for income tax purposes - that LLC woudl be "disregarded entity" - means - ignored fro income tax purposes - and all income and deductible expenses are reported on the owner's income tax return - in your case C-corporation's tax return- so - that LLC would be essentially treated as a department of your C-corporation - all income will be owned by C-corporation. - for all other purposes - the LLC will be treated as a separate legal entity - it may own assets, may hire employees, will be responsible for other tax types - sales tax, employment taxes, etc.Let me know if you need any help or further clarification this matter.