Being a Shareholder in a New Age Class “C” corporate structure is the legal means that can bring about the genuine Economic Empowerment of millions of people that so many people have been hoping for years. Millions of people can safely pool and control limited, scant and/or meager financial resources for business development and asset acquisition purposes. For the first time in world history, anyone of average financial means can leave a major corporate enterprise for their children Below are ten more reasons why you should be a Shareholder-owner in a New Age Corporation like UICI.
1. UICI can minimize your overall tax burden.
Depending on the amount of profit UICI earns and your individual tax bracket, UICI can help you minimize taxes. As shown in the corporate rate schedule on page 17 of Form 1120, the IRS taxes different levels of profit at different rates, sometimes much lower than individual rates. For example, in 2016, the first $50,000 in profit is taxed at a rate of 15 percent, as opposed to 28 percent for an individual with that same amount of income.
2. UICI can carry profits and losses forward and backward.
Whereas the fiscal year must coincide with the calendar year for LLCs and S corps, as a Class “C” Corporation, UICI enjoys more flexibility in determining our fiscal year. Thus, Shareholders can shift income more easily, deciding what year to pay taxes on income or bonuses and when to take losses, which can substantially reduce tax bills.
3. UICI can accumulate funds for future expansion at a lower tax cost.
Being a Class “C” Corporation like UICI, will allow Shareholders to shift income readily and retain earnings within the company for future growth, usually at a lower cost than for pass-through entities. Since profits from S corporations appear on shareholders’ tax returns whether they have taken a distribution or not, owners can get bumped into higher tax brackets even though they plow profits back into the company.
4. UICI can write off salaries and bonuses.
Shareholders of UICI can serve as salaried staff and/or employees. While these salaries and bonuses are subject to payroll taxes and Social Security and Medicare contributions, UICI can fully deduct its share of payroll taxes. Moreover, UICI can pay directors, staff and employees enough so that no taxable profits remain at the end of the fiscal year (within reason, of course; the IRS does check to make sure salaries correspond to the services that Shareholder-owners provide as employees). Shareholders frequently use this option rather than receive dividends, which would indeed be taxed twice.
5. UICI can deduct 100% of medical premiums and other fringe benefits.
As long as UICI makes fringe benefits equally available to all employees, not just shareholders, there are many hefty tax write-offs possible for UICI because UICI’s employees also receive tax free: medical reimbursement plans and premiums for health, long-term care and disability insurance. It’s a wash for S corporations; the shareholders deduct medical costs from gross income but have to declare these same fringe benefits as income. In addition as a UICI Shareholder-owner, you can benefit greatly from the potential small business tax deductions. Being a Class “C” Corporation can completely mitigate the effects of double taxation. When you consider the impact of taxes on a small business, it is well worth the effort (and the paperwork) to make UICI work for you and everyone you know..
6. UICI can write off charitable contributions.
Class “C” Corporations, like UICI, are the only legal entities that can deduct contributions (of not more than 10 percent of taxable income in any given year) to eligible charities as a business expense. You can carry over charitable donations above the limit to the next five tax years, too.
7. UICI can carry losses over multiple years.
This business structure can take large capital and operating losses, and the IRS does not tend to scrutinize businesses, especially new ones, if they show losses several years running. This is especially important for start-ups that may take substantial losses in the first year but wish to carry them forward to future years.
8. Class “C” Corporations enjoy fewer ownership restrictions than S corps.
For starters and with few exceptions, S corporations have numerous rules limiting ownership: no more than 100 Shareholders, no non-resident alien owners and no non-individual owners. They also may not issue more than one class of stock. When entrepreneurs are seeking equity investors, these limitations keep their hands tied.
9. Class “C” Corporations encourage passive investors.
One much-lauded advantage of S corporations is the ability to pass losses through to individual tax returns. However, this only applies to partners who participate actively in the management of the corporation. Thus, passive investors tend to fare better tax-wise in a Class “C” Corporation.
10. UICI can attract financing and go public.
Venture capitalists prefer the flexible ownership of the Class “C” Corporation’s business structure, and some forms of small business financing are only open to Class “C” Corporations, such as Rollovers for Business Start-Ups (ROBS). Down the road, a small business enterprise, “SBC”, like UICI, can grow into a very big one, large enough to attract funding as a publicly traded company on a national stock exchange, in which case, the small business enterprise must be a Class “C” Corporation.
A Rollover for Business Startup (ROBS) is a way to invest funds from your retirement account, like a 401k or IRA, into shares in a Class “C” Corporation without paying early withdrawal penalties or taxes. A ROBS does not work for an LLC, Sole Proprietorship, LLP, or S Corporation. You must be a shareholder-owner in a C corporation to qualify for a ROBS because the IRS prohibits certain transactions involving qualifying employer securities which only a Class “C” Corporation can pass.