C Corp Passive Income

As we continue to look at ways to earn more money, something that has received a lot of attention is the limited liability company (LLC). A LLC can come with some pretty expensive legal fees, so it’s important to do your research before you choose this option.

Fortunately for those looking to create their own LLC, there are many free resources available online. You will be able to find information about what an LLC is, how to form one, and even tips on starting your business within an LLC.

In fact, most states allow anyone to form an LLC for no cost at all! And while having formal shareholder agreements may not be required in some cases, they are recommended as good practices.

There are also several different types of businesses that people form LLC’S for, such as food or beverage companies, technology firms, and media companies. The choice really depends on your goals for the company and your personal risk tolerance.

With that being said, let's take a closer look at some simple ways to start your own passive income stream by forming an LLC.

Examples of C Corps

c corp passive income

Corporations that are listed as corporations in the state where they are headquartered (usually referred to as a C corporation) do not have shareholders, nor does it offer stock to the public. They do, however, offer special status for income tax purposes by limiting how much business related profits or losses can be carried over into future years.

These types of corporations typically keep less money in the company than other forms of businesses, which is what makes them attractive to many savvy investors. By keeping their profit margins low, these companies limit their liability in case something goes wrong. This also means that their net income is lower, making it more difficult to determine if they are profitable or not.

One of the most common ways C corps generate revenue is through licensing fees or royalties. For example, an organization may hold the copyright to a book or movie, and therefore retain the right to make sure you cannot re-publish it without their permission. It is similarly hard to reprint material due to copyrights. Companies hire this legal pressure onto others to buy a license to use their content or risk being plagiarized or copied.

Another way they make money is through services they create products that people pay to use. Software, clothing, medicine, and entertainment all require licenses to use, so they are paid for separately. People feel obligated to purchase their product because it is free until you do, at which point you are paying a monthly fee to continue using it.

Examples of D Corps

c corp passive income

Many large corporations exist solely to keep spending money at an acceptable level. They do not make products, they provide services that people want so they earn their income through fees for those services. Because these businesses do not manufacture anything, they are categorized as a ‘d’ corporation (for dis-manufacturing).

A company will typically drop the word ‘Corporation’ when filing documents with state or federal governments. This is because it is already implied by the name!

D corps usually have very limited personal assets aside from what is needed for daily life. These assets are used exclusively for business purposes and are protected by law from being spent on things such as house renovations or family vacations.

Because there is little extra cash left over, many d corporations choose to pay lower dividends than a more profitable c corp would. Or perhaps they don’t offer dividend payments at all!

These companies still reap the benefits of having a strong brand, access to great talent and resources via connections, and community spirit. All of these help them achieve their corporate goals and maintain a healthy work environment.

In fact, some companies actively encourage employees to spend time outside of work interacting with each other and the local area to promote workplace solidarity.

How to start a business as a C Corp

c corp passive income

Starting your own business can be overwhelming. There are so many things to think about, from determining if this is really what you want to do, to finding the right location for your office, to figuring out who will help you run the company when you are not.

And while it is true that being a shareholder in a large corporation like Amazon or Google provides you with more resources than someone starting their own business, there are ways to launch your own small business without too much overhead.

You can choose to begin as either an S Corporation or as a C Corporation. This article will talk about why owning a C Corp is a better choice than becoming an LLC or POLL.

Owning a C Corporation

The word “corporation” comes from the Latin words meaning body and bond. As such, corporations have an internal structure made up of individuals who work together towards a common goal.

Selecting a business name

c corp passive income

After you decide what type of business to start, your next step will be choosing a great business name! This is one of the most important steps in starting your business because it will tell the world about who you are and what you offer.

When naming your company, make sure you’re not using too many numbers or special characters that could potentially get confused for something else. Also, make sure your business name includes your personal identity so people can connect with you!

Many entrepreneurs choose to use their own names when they first begin running their businesses, but this is only appropriate if you don’t want to change your last name later.

By having your own unique brand, you project an image to others who know you. It also helps promote trust as now other people can identify you by your name.

Registration with the IRS

c corp passive income

As we mentioned before, even if you want to keep your business informal, there is still one major hurdle that can prevent you from taking your company full-time - registration as an LLC or C corporation.

Most states require business owners to be registered with the IRS as well, which includes having an employer identification number (EIN) and filing corporate tax returns.

This could potentially cost money depending on how urgent you need this done! Luckily, most people are able to pay someone else to do it for a small fee or even free in some cases.

Organization of the business

As we mentioned before, choosing to run your business as a limited liability company (LLC) or corporation is mostly dependent upon what kind of business you want to have. If you plan to open up a restaurant, then an LLC may be better for you because you can easily hire and fire individual team members. For example, if someone does not seem like they are working hard enough, you can let them go and find new employees!

If you plan to start a manufacturing firm, then it is easier to retain employee loyalty in a more stable work environment. People that work in factories usually spend a lot of time behind closed doors so there is less opportunity to hear rumors about how their manager is treating others.

For both types of businesses, keeping track of financials and legal documents can get confusing quickly. Hiring professional help can save you a ton of money in fees down the line.

We recommend using Nolo Press’s “Corporation Survival Guide” due to its ease of use and clear writing. Both versions are very affordable at around $10-20 per book depending on the size you need.

Selecting a location

c corp passive income

As mentioned before, choosing your location is an important first step to starting your business. You do not want to choose a place that does not support you as an entrepreneur or that will put too much pressure on you.

Make sure to look into the area’s economy by searching online and talking to people around who are already in the industry. You want to make sure it is a stable market for yourself so that people can come to you instead of the other way around!

Also, check out if there are any external resources like banks or restaurants near where you plan to open up a business. This would help you start off with more money since you could use those services.

And lastly, try to find a middle ground between being close to home and having easy access to things.

Getting licenses and permits

c corp passive income

As we mentioned before, owning a business comes with many responsibilities, one of which is getting licensing and permit for your business. Depending on what kind of business you have, this can be very difficult to do alone.

Most small businesses need some sort of license or permission to operate legally. This includes things like sales licenses, food licenses, etc. Some require special training or certification as well.

Running a restaurant without having a proper sales license is definitely not a good idea! Luckily, there are ways to make sure that doesn’t happen to you.

There are several sources where you can buy a business license online or through brokers. Many of these companies also offer services like help you run your business, protect you against lawsuits, and even handle all of your administrative tasks so you don’t have to.

They typically start around $100 per year depending on how much business you will be conducting at a minimum. It is always best to go paid service over free ones because it has protections.

About The Author

Tiara Ogabang
Tiara Joan Ogabang is a talented content writer and marketing expert, currently working for the innovative company juice.ai. With a passion for writing and a keen eye for detail, Tiara has quickly become an integral part of the team, helping to drive engagement and build brand awareness through her creative and engaging content.
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