Why a C Corporation?
C Corporations provide the owners significant shielding from the company's liabilities and debt. There are additional benefits, however, including 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, C Corporations allow the business to take deductions from the salaries of the "owners" of the entity. A C corporation can have unlimited shareholders (owners). C Corporations also allow ownership to be transferred through the sale of stock.
It should be noted, the business can't be taxed on the owners' individual taxes, but from the entity itself. It pays taxes based on the C Corporation's income, and at a corporation's tax rates.
The C Corporation, due to its complexity, may be perceived as more legitimate which can improve its standing in the marketplace and when raising capital. A C Corporation also has a low risk of being audited (in comparison), because of its perceived legitimacy. In addition, business expenses are often 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 ARE THE DRAWBACKS OF A C CORPORATION?
- C Corporations are the most regulated of all corporations.
- C Corporations must create and maintain bylaws
- C Corporations must hold regular meetings (and document them).
WHAT'S THE PROCESS OF FORMING A C CORPORATION?
C Corporations can be more complicated to form than a sole proprietorship, LLC, or general partnership. 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.
TO GET STARTED CREATING A C CORPORATION, SIMPLY FILL OUT THE FORM BELOW: