Hi All, I'm new to this forum and require a bit of advice from practicing accountant, I recently moved to the USA and own two companies one is sole member LLC and the other one is C Corp where I'm 100% shareholder. Just wanted to know that if I'm not withdrawing any income from C corp then I shouldn't include anything in my tax return or is there any requirement to include anything on the personal tax return? any help would be highly appreciated.
The LLC is a "pass-through legal entity". The company is not taxed. the profit/losses are flowing straight through to the owner and reported in the annual Form 1040 to the IRS as business income.
C Corp's are stand-alone legal entities and they are taxed directly by the IRS on their income/(losses) The shareholder does not have to report the income generated by the company until the moment he collects part of that income in form of a dividend.
In other words, C Corporations are subject to double taxation. Profits generated are taxed at a corporate rate and the remaining profit after tax is again taxed at the time of the distribution in form of a dividend by the shareholder.
The only reason you may want to select the C Corp legal status would be if you plan to increase the number of shareholders over 100, plan to raise funds from foreign investors,/ and /or offer different classes of shares.