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Can you clarify this:

"But then if you end up not spending that money because you made a boatload of cash the next year and want to take it out:"

Why would you have to pay taxes again? Sure, you can pay taxes on the growth, but you wouldve paid taxes on the growth even if you had taken it out.

Clearly I'm missing something, so please clarify :-)




Because in a C-Corp, the earnings don't pass through to you personally. They belong to the corporation. So you pay tax on them at the corporate tax rate. Then when you personally want the money, you have to pay it to yourself as income. It gets taxed AGAIN. That's basically the only way for you to get the money. The idea is that with a C-Corp, if you want cash you earn in the corp to ever become your personal money, you have to take it out the year you earn it, otherwise those dollars will be taxed twice.




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