CORPORATIONS

 

A corporation is an independent entity that pays taxes and absorbs all risks associated with operations. Shareholders own percentages of the corporation according to the number of shares they have purchased. This legal structure is not usually suited to small or startup companies. 

 

C-Corporations versus S-Corporations:

 

C-Corporation: The standard corporation. The C-Corporations are separately taxable entities. They file a corporate tax return and pay taxes at the corporate level.

 

S-Corporation:  A pass-through tax entity, the S-Corporation has elected a special tax status with the Internal Revenue Service (IRS). A S-Corporation files a federal return, but no income tax is paid at the corporate level. The profits/losses of the business are instead “passed-through” the business and reported on the owners’ personal tax returns. Any tax due is paid individually by the owners. 

 

Before setting up a corporation, you should seek advice from a lawyer or other business professional.

 

For more information on Corporations select the STARTING A BUSINESS link to access the New Mexico Economic Development Department. The link will take you to the Business Resources Center. Scroll down the page and select the Structuring a Business link. Scroll down to Corporation and S-Corporation.

 

For additional information on Corporations structures, select the CHOOSE YOUR BUSINESS STRUCTURE link, which will take you to the U.S. Small Business Administration web page.

 

For information from the New Mexico Secretary of State, Corporation Bureau select the CORPORATIONS HOME PAGE link and the CORPORATIONS FAQ link.

 

For specific information on S-Corporations, select the STARTING AND MANAGING S-CORPORATION link, which will take you to the U.S. Small Business Administration web page.

 

For tax forms select the TAXATION FILING REQUIREMENTS link and scroll down to Subchapter S Corporate Income Tax Return Forms.