Corporate Tax

Corporate tax in the United States is based on a percentage of the income that a company or corporation generates within the country. Most companies are taxed on their income or capital within a range that starts at fifteen percent of these amounts.
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A corporate tax rate in the US can range from 15% to 35%. This upper tax limit is the highest rate that is applied internationally for this type of company income.

corporate-tax-rate-600A corporation is a legal entity that is formed through a state office in the US. A group of company founders who wish to start a corporation will need to apply, through the secretary of state for their company’s jurisdiction. This group of company founders will need to produce a company charter and select the officers who will be managing the corporation. The company charter will have the number of company stock shares that are associated with the business.

A corporation that is formed will generate a certain amount of income from selling goods and services in a local or regional area. This income will have a specific corporate tax rate that is applied. Net profit will need to be decided based on the company’s generated income and its business expenses. Determining the amount of corporate tax is completed much like an individual tax return. However, a company has its own types of business expenses that can be deducted, including employee salaries and other company costs.

The net profit that a business generates each year needs to be documented and sent in on traditional tax returns that are developed for a corporation. Federal tax rates range from fifteen percent on up to thirty-rive percent of a company’s net profit amount. States have their own range of tax brackets that start at zero percent and can reach up to ten percent for a state tax. Some cities impose a tax on the corporations that are located within a city’s jurisdiction. These tax rates can be as high as 9% in the US.

There is a federal alternative minimum tax that most companies need to be aware of. This tax is twenty percent and is imposed on a company’s regular taxable income. There are various business adjustments that can be used when calculating this type of business tax. A company can select this tax bracket, if an alternative minimum tax is more affordable and beneficial. A flat rate is imposed on a higher adjusted amount of taxable income. The threshold for this amount is high, and a company can use it as an exemption that is applied.

Company officers are paid with corporate profits as a salary or company bonus. An officer will need to file an independent tax return on the salary or monies that are distributed by a company. Personal tax rates will apply according to the amount of salary or bonus that is paid. The corporate profits are being taxed once as a company and, again, as an individual’s salary or bonus.