A C corporation is a form of corporate company that has stockholders as its owners but is legally distinct from them. In comparison to other business entity kinds including sole proprietorships, partnerships, S corporations, and limited liability companies (LLCs), a C corporation has various benefits and drawbacks. Among a C corporation’s primary characteristics are:
A C corporation’s stockholders are not held personally accountable for the debts or losses sustained by the company. They are only allowed to lose the money they put in the company. By doing this, they shield their private property, such as their home or automobile, from lawsuits or creditor claims.
A C corporation’s profits are taxed twice: once at the corporate level and once at the individual level when dividends are paid to shareholders. In comparison to other corporate organizations that are only taxed once, this may result in a larger tax burden for the shareholders.
An infinite number of people or other legal organizations, such as other companies or trusts, may become stockholders in a C corporation. There are no limitations on the kind or class of shares that may be issued, and the shareholders may be citizens of any nation. This enables a C company to raise money from a variety of sources and investors.
To keep its legal standing and advantages, a C company must adhere to a set of laws and regulations. The submission of annual reports, financial statements, and tax returns; frequent shareholder and board meetings; the maintenance of minutes, resolutions, and bylaws; and the payment of fees and taxes to the state and federal governments are a few examples.
