A domestic corporation conducts business in the country where it was incorporated. It aims to generate profits for shareholders and offers liability protection, shielding shareholders’ personal assets. A domestic corporation is like its own living entity.
To become an S corporation, a C corporation must change its tax year. An LLC is not considered a domestic corporation.
A domestic business operates within one country’s borders, while an international business conducts transactions across borders. Taxation and import duties often differ between the two.
Whether a corporation is domestic or foreign depends on where it originated versus where it operates. For instance, Honda Motors originated in Japan so it is a foreign corporation. But Honda of America Manufacturing Inc. was founded in Ohio, making it a domestic corporation.