Corporation Address

[GuyC]

I have a question that I can't seem to find the answer to anywhere else.

I am looking to start a business by mid 2010. I currently live in New York but will be opening in Connecticut. I will be forming a C Corporation. I will be leasing office space in CT just prior to launching the company.

Obviously I have a lot of work to do prior to starting the company. I have to get a bank account, sign up for payroll services, apply for some business credit with Dell and other companies, etc, etc, etc!

So my question is how do I do this all without the actual corporation formed? I can't form the corporation in Connecticut until I have an address - it asks for one on the form. I am obviously not going to lease an office and pay rent just to have an address.

It's my understanding that a registered agent address is not a substitute for a physical business address as the CT form has separate areas for each address and states they cannot be the same.

So how is this normally done?

Thanks in advance for any help!

[cg410]

I don't know how CT does it, but in many states the registered agent is all you need. Anyway, if you need an address, Google for a mailbox rental service in the area in which you need it. Or, incorporate in a different state.

BTW, why a C-corp over an S-corp?

--J

[GuyC]

In CT you need to put down the physical address of the main office. No PO boxes are allowed, which would rule out a mailbox place as well. They need the actual physical location of the office. A registered agent is required as well that is not the same address as the company. There is a separate area on the form for that.

In terms of a C-corp rather than an S-corp; several reasons. I did extensive research on this actually. I found a C-corp fits my needs better.

The main reason is that I want to keep a decent amount of profits in the business. For instance, $50k in profits are taxed less for a corporation than if I were to pass them through with an LLC or S-Corp. I want the business to have cash for growth purposes anyway, so this works best.

[cg410]

It's only a "PO Box" if you rent it from the post office. There are 3rd party companies that will give you a mailbox and a street address along with it, the most famous of which is called Mail Boxes, Etc.

Wanting to keep money in your corporation is fine, but you're probably not going to win on taxes:

• You get a standard deduction, your corporation does not
• If you take money out of your S corporation on 12/31 and put it back on 1/1, you now have a personal tax deduction in the new year
• Money does you no good in a corporation until you pull it out (kinda like how money does you no good until you actually buy something)... eventually you'll want to pull it out, and at that point you're now double taxed

The only good reason for 99.9% of small businesses to remain C is if they want to have a foreign shareholder, which is prohibited by S.

--J

[GuyC]

Okay, I looked at the forms again. The actual incorporation for does NOT ask for the address of the company. The "Organization and First Report" filing does require this though.

So my new question is, how soon after you file the incorporation form do you typically file the first report? The form includes areas to list officers and directors.

In terms of what you are saying in regards to an S-corp, I understand and you are right, it just depends on how you look at it.

I know I get a standard deduction, but it's not going to make much of a difference once I start taking a normal salary. The deduction and the lower tax rates even out as long as the money kept in is not so small. The tax on $100k left in the corporation is less than if I were to make a $100k income (even including my deduction). This is a clear fact.

Say I take out $100k from the company and then put $50k back. I've paid more taxes on that $50k than if I just left it in to begin with since I am personally taxed at a higher rate. I personally get a tax deduction, but the upfront taxes I end up paying are more.

The double taxation only applies to dividends. I won't be pulling money out with dividends, only salary and bonuses.

Thanks for your input though. At least it's making me try and prove my thinking is on point.

[cg410]

I'm not sure about the "Organization and First Report" as I think that's a CT-only deal.

You are right that double taxation applies only to dividends... but payroll taxes apply to salaries and bonuses! This will generally (always?) be less than the double tax on the dividends, so it's a great idea if you do go with a C-corp, but still isn't giving you as good of a deal as the S-corp.

[GuyC]

Good point about the payroll taxes. Obviously payroll taxes would have to be paid for all employees, but how would that work for me with an S-corp then? Do I then not draw a salary and just pay myself with the entire profits of the company?

[cg410]

With an S-corp, you're supposed to pay yourself a "reasonable" salary if you actively participate in the business and then take the rest as a dividend. The IRS offers no help as to what "reasonable" is, so think the minimum you would possibly pay someone to do your job.

--J

[GlobalWealth]

With an S-corp, you're supposed to pay yourself a "reasonable" salary if you actively participate in the business and then take the rest as a dividend. The IRS offers no help as to what "reasonable" is, so think the minimum you would possibly pay someone to do your job.

--J

from a tax standpoint, a C-corp doesn't usually become beneficial until you are earning at or near $1m in profit. you best bet is to talk to a local CPA and have him show you the tax implications of both s and c corps. it is tough to do on a forum without sitting face to face and using real numbers. I will attempt to give some explanations, but if you keep $50k in profit in your business and reinvest in growth, as long as the money is spent, it is tax deductible or at least the depreciation is, depending on asset purchased. an S corp allows you to only pay self employment tax on your salary, and the total salary and non-salary profit, or bonus, is taxed at your regular tax rate. while your c corp profit tax is taxed at a lower rate, when you take it out as bonus or salary in later years, you will pay your income tax on it again, therefore making it double taxed. if the c corp has losses, as most businesses do in their first year, or years, you get no personal tax deduction. if the s corp has losses, you can deduct them from your taxes. this is a huge benefit not to be discounted. any good small business owner knows a good small business always "loses" money. I am not advocating tax evasion of any sort, but with smart tax planning and taking all available deductions and write offs, in many cases it is possible to run your small business at a cash flow profit but a tax loss. this is where a really good CPA can save you a lot of money. you can always convert your business to a c corp at a later date if it becomes beneficial. but it rarely, if ever is.

to answer your original question, when I form new LLC's or corps (S or C) for clients, we frequently use the registered agent's address as the business address. I just formed an LLC for a client out of the US and that is what we used.

as a side note, there are ways to eliminate corporate taxation and minimize personal taxation with offshore entities.