Advantages of Starting a C Corporation
Protect your personal assets with this popular corporate structure.
The most common type of corporation in the U.S. is the C Corporation.
By forming a C Corporation, business owners create a separate legal structure that helps shield their personal assets from judgments against the company. C Corporations have a specific structure that includes shareholders, directors, and officers.
The C Corporation is a time-tested business formation. It has many advantages, including:
- Limited liability for directors, officers, shareholders, and employees
- Perpetual existence, even if the owner leaves the company
- Enhanced credibility among suppliers and lenders
- Unlimited growth potential through the sale of stock
- No limit on the number of shareholders, although once the company has $10 million in assets and 500 shareholders, it is required to register with the SEC under the Securities Exchange Act of 1934
- Certain tax advantages, including tax-deductible business expenses
The C Corporation structure does have its drawbacks. For instance, a C Corporation's profits are taxed when earned and taxed again when distributed as shareholders' dividends, what's known as "double taxation." Shareholders in a C Corporation also can't deduct any corporate losses. To avoid these concerns, many small business owners choose to form an S Corporation instead.
Watch our Video: What is a C Corporation?
Start Protecting Your Assets by Forming a C Corporation
Now that you are aware of the pros and cons of a C Corporation and if you wish to start one, The Company Corporation can help you form your new C Corporation in any state or the District of Columbia. We'll help you draft Articles of Incorporation for your business and file them with the state.
Remember, once you're incorporated, your C Corporation must adopt bylaws, hold directors' and shareholders' meetings, and issue stock to owners. The Company Corporation can help you with these and many other business requirements.
Learn More about C Corporations
To compare the C Corporation with other types of business structures, visit our Frequently Asked Questions section.