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What is a "C" Corporation?

Written by: Jon Mitchell Jackson

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Posted over 3 years ago. Applies to California, 1 helpful vote, 0 comments

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Be Smart: Protect Your Business and Assets

A "C Corporation" (or simply a Corporation) is considered by law to be a unique entity separate from those that own it. As an individual entity, a corporation can be taxed, sued, and can enter into contractual agreements. Corporations are owned by shareholders of the corporation, which elect a board of directors to oversee the major business decisions and policies. When ownership changes in a corporation, the corporation does not dissolve.

What Are the Main Advantages of Forming a “C” Corporation?

Corporations are said to have less risk from government audits as a corporation (as opposed to sole proprietor or LLC) ; Owners of Corporations have limited personal liability for business debts; Corporations can deduct the cost of benefits as a business expense; Corporations can split corporate profit among owners and the corporation, paying a lower overall tax rate; With a Corporation, there is no limit on the number of stockholders; Corporations can raise additional funds through the sale of stock; You do not need to be a US Citizen to own or invest in a C Corporation; You can elect S Corporation status if certain requirements are met, enabling the company to be taxed similarly to a partnership.