Tax on C corp
Understanding Tax on C corp
Using a C corporation can actually save you tax if you need to keep money in the business to help it grow, for example if you need money to buy inventory or fund a marketing campaign.
This is called income splitting because instead of having all the income taxed in your hands at rates of up to 35% you can keep some in the corporation where it will be taxed at rates as low as 15%.
The first $50,000 of profits you keep in the corporation will be taxed at just 15% - Tax on C corp and the next $25,000 will be taxed at just 25%.
For this strategy to work your company must, of course, be earning surplus profits that you can afford to keep in the business instead of paying out for your personal living expenses.
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