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WCI #302: Where to Store Your Money

White Coat Investor Podcast

NOTE

Taxation of C Corporations and Retained Earnings

When forming a corporation or electing an LLC taxed as a corporation, a C corporation is subject to a 21% corporate tax rate on its profits. The corporation can pay employees and the salaries become taxable income for the employees. Retained earnings in the corporation can be invested after the 21% tax is paid. Some individuals opt to withdraw all profits from the corporation as salaries annually to avoid corporate taxes, which is not a significant tax-saving strategy.

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