If one C Corporation is a good thing, does that mean that two is double the fun? No! In fact, this is a mistake I’m starting to see more and more of with new clients coming in. I think what happens is that they go to so-called corporate specialists that are more like corporation mills … grinding out more and more corporations.
The problem is that the taxpayer thinks that having two C Corporations means you’re getting double the advantages, when actually you’re creating more of a headache. If you own more than one C Corporation, and they have similar controlling interests, then you need to consolidate the corporations when you file your tax return. That means more filing fees and less benefits.
The moral of this story is to make sure the person you have setting up your entities fully understands the total pictures of your entities. That’s one reason that I always have another expert on the phone with me when I talk to my personal CPA clients. For example, most of the time the first phone appointment with me includes Megan Hughes, our business structure specialist. She’s right there to answer questions about what it takes to set up the companies legally no matter what state you live in and even more importantly, what you need to do to keep them legal.