How to form a C-corporation for Alcohol Beverages

Introduction

You can form a C-corporation for alcoholic beverages, but it takes some work. You must obtain approval from the Alcohol and Tobacco Tax and Trade Bureau (TTB) to manufacture and sell alcoholic beverages (which is no small feat). If you want to just distribute alcoholic beverages—for example, as a distributor or retailer—then there are fewer steps involved. However, before you dive in head first with your idea for a business that sells alcoholic beverages, it’s important to understand the rules surrounding these products and what they will mean for your corporation.

In this guide, we’ll explore questions like “What exactly is a C-corporation?” How do I form one?” And “How do I get approval from the TTB?” We’ll also offer some tips along the way so that by the end of this article you’ll be ready to start selling adult beverages in America!

Do your research

Research the laws in your state.

Research the laws in states where you want to sell your products.

Research the laws in other countries where you might want to sell your products.

The third major difference is how each entity distributes profits to shareholders. In a C-corporation, profits are distributed in the form of dividends; in an S-corporation, they’re distributed using a draw and may need to apply for state and federal licenses in order to sell your products. Check with your local government office and find out what the laws are in your area. Research the laws in other countries where you might want to sell your products.”

Understand the difference between a C-corporation and an S-corporation

The first thing to clarify about the difference between a C-corporation and an S-corporation is that they both file taxes on different tax returns. A C-corporation, or “regular corporation,” files its taxes using a corporate income tax return. In contrast, an S-corporation files its taxes using a personal income tax return.

The second major difference is how each entity pays taxes: while both entities are taxed at the corporate level , only an S-corporation makes its owners responsible for paying those federal and state taxes themselves.

If you’re selling to consumers, research the laws in each state where you want to sell your products. If you’re selling to businesses, research the laws in other countries where you might want to sell your products.

Learn which states do not allow the sale of alcoholic beverages

If your company plans on selling its products in one or more states that do not allow the sale of alcoholic beverages, you will need to incorporate them in a different state.

The following states prohibit all sales and distribution of any type of alcoholic beverage: Alabama, Arkansas, Georgia, Idaho, Kansas, Louisiana, and Mississippi. Other states may also choose to prohibit certain types of alcohol sales or specific brands or products; these include Utah (only beer), Ohio (only wine), and New York (only hard cider).

When a corporation files its taxes, it does so using Form 1120. This form includes the corporate income tax return for any C-corporation that’s making over $500,000 per year. The IRS also requires an annual filing of Form 8937 if the corporation has foreign shareholders or is owned by another foreign corporation.

Talk to an attorney who specializes in forming corporations for alcoholic beverages

Make sure the attorney you hire is licensed in your state and familiar with the laws and regulations that govern your state’s alcohol beverage industry.

Work with this attorney to form a corporation that complies with all applicable federal, state, and local laws.

If you are planning to sell alcohol, you will also need to obtain a liquor license from your state’s alcohol beverage control board. This is an additional expense that may require an application fee and annual renewal fees.

If you want to form a C-corporation for alcoholic beverages, you’ll want to do your homework first

Make sure you understand the laws in your state and any states where you plan to sell your products. Also, talk with an attorney who specializes in forming corporations for alcohol beverages. Finally, research the pros and cons of different types of corporations. You should make sure which states allows it  and what are the advantages and disadvantages of this start-up.

Conclusion

We hope this article has helped you understand the ins and outs of forming a C-corporation for your alcohol beverages business. The process seems a bit longer but it isn’t. However, it is quite simpler and less hectic if you handover the effort to Trademark Avenue completely.