Why a C Corporation?
As with other corporations, C Corporations provide the owners insulation from the company's debts or liabilities. A C Corporation may also provide opportunities for increased deductions such as employee benefits.
A C Corporation is the most common form of business entity for a number of reasons. For starters, a C corporation can have unlimited owners (shareholders). C Corporations also allow ownership to be transferred through the sale of stocks. Also, C Corporations may take deductions from the salaries of the "owners" of the entity.
In addition, the entity isn't taxed on the owners' individual taxes, but from the entity itself. It pays taxes based on the C Corporation's income, and at a C Corporation's tax rates. A C Corporation also allows owners to raise capital by selling stock.
The C Corporation, by its very nature, may be perceived as more legitimate because of its complexity and standing in the marketplace. It also provides a far lesser risk for audits, because of its perceived legitimacy. In addition, the business's expenses may prove to be tax-deductible. Lastly, a C Corporation provides self employment tax savings. The savings are due to the ability for a C Corporation to allow owners to work for the business, and therefore be classified as employees.
What's the Process of forming a C corporation?
C Corporations are more complicated to form than a sole proprietorship or an LLC. It requires that a company be registered with the state, and all necessary fees must be paid in full. In addition, a C Corporation must adopt specific bylaws, hold meetings between shareholders and directors, and issue stock.
What are the drawbacks of a C Corporation?
C Corporations are the most formal, and therefore most regulated, of corporations. They are required to create and maintain bylaws, hold regular meetings, and continuously document the meetings of shareholders, owners, and directors.
To get started creating a C Corporation, simply fill out the form below: