What is a Domestic Corporation
A domestic corporation is a company that conducts its affairs in its home country. It is often taxed differently than a foreign corporation, and may be required to pay duties or fees on the importation of its products. Typically, a domestic corporation is able to conduct business in other states or other parts of the country where it has filed its articles of incorporation.
Businesses that are incorporated in a different country from which they originate are referred to as foreign corporations.
BREAKING DOWN Domestic Corporation
"Entry Classification" rules of the IRS classify the following business entities as "Corporations."
- A business entity formed under a Federal or State statute or a statute of a federally recognized Indian tribe if the statute describes or refers to the entity as incorporated or as a corporation, body corporate or body politic.
- An Association under [IRS] Regulations section 301.7701-3.
- A business entity formed under a Federal or State statute if the statute describes or refers to the entity as a joint stock association.
- A state-chartered business entity conducting banking activities if any of its deposits are insured by the FDIC.
- A business entity wholly owned by a state or political subdivision thereof, or a business entity wholly owned by a foreign government or other entity described in [IRS] Regulations section 1.892.2-T.
- A business entity taxable as a corporation under a provision of the code other than [IRS] section 7701(a)(3).
- Certain foreign entities.
- Insurance Company
Generally, LLCs are not considered as corporations, but they can be elected to be treated as such for tax purposes by filing Form 8832.
IRS Publication 542 is the taxation guide for Corporations.
Many companies in the United States are incorporated in Delaware, meaning that they are subject to the laws of that state. Delaware is perceived as a business-friendly state; in addition, the state's Court of Chancery is considered an expert in resolving complex corporate legal matters. If a company incorporates in Delaware but does not do business there, it is considered an out-of-state corporation or a foreign corporation.