How Can You Get Your Money Out of a C Corp?

This post is in: Business


There are five main ways that you can get money out of your C Corporation:

  1. Draw a salary. This will be taxable to you and a deduction for the Corporation.
  2. Declare and pay dividends. This will be taxable to you and NOT a deduction for the Corporation.
  3. Take a loan. Be careful with this one. The IRS likes to re-characterize loans to shareholders as disguised constructive dividends. That would mean double taxation.
  4. Invest with your corporation. Be careful with this one as well. This could means that you’ve just saddle your corporation with an appreciating asset
  5. Loan money to another entity. This can be a great strategy.

One of the places that people get into trouble is when they jump into a business structure without a good strategy about how they will start it, grow it, fund it and most importantly, exit it. This is especially true with a C Corporation. We’ve had to clean up past C Corporation mistakes more times then I like to think about!

Make sure you know the Tricks and Traps of C Corporations before you start or build your C Corporation.

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