Startup business owners must consider the legal and tax considerations associated with selecting a particular type of business structure. This is the fourth part of a series of blogs on the tax treatment of business entities. This blog will address the tax treatment of corporations, often referred to for tax purposes as C corporations.
Like an individual person, a corporation may be taxed and held legally liable for its actions. Individual shareholders are generally not personally liable for the debts of a corporation. This is one of the primary reasons that corporations are formed. When one or more individuals form a C corporation, they create an entity with two separate types of taxpayers, the corporation, and the shareholders. As a separate tax-paying entity, a corporation files Form 1120 or 1120-A, U.S. Corporation Income Tax Return.
Most employers impose a dress code for the office. As a result, there are more than a few members of the American workforce who must purchase items including expensive suits, dresses, shirts, blouses, and shoes to observe an employer’s dress code. Many employees have wondered whether the cost of these clothes, often worn only for work, is deductible at tax time.