C Corporation

Why choose a C corporation?

When registering a company, C corporation or C corp is the most common corporation type, but it isn’t always the top choice for small business owners. C corporations provide limited liability protection to owners, who are called shareholders, meaning owners are typically not personally responsible for business debts and liabilities. C corporations may also offer greater tax advantages because of an expanded ability to deduct employee benefits, which are most often used by growing businesses.  

C corp advantages

C corporations typically provide a number of advantages:

• Limited liability protection. Owners are not typically responsible for business debts and liabilities.
• Unlimited owners. C corps can have an unlimited number of shareholders.
• Easy transfer of ownership. Ownership is easily transferable through the sale of stock.
• Unlimited life. When a corporation’s owner incurs a disabling illness or dies, the corporation does not cease to exist.
• Raise capital more easily. Additional capital can be raised by selling shares of stock.
• Credibility. Corporations may be perceived as a more professional/legitimate entity than a sole proprietorship or general partnership.
• Lower audit risk. Generally C corporations are audited less frequently than sole proprietorships.
• Tax deductible expenses. Business expenses may be tax-deductible.
• Self-employment tax savings. A C corporation can offer self-employment tax savings, since owners who work for the business are classified as employees.

How do you form a C corporation?

In order to register a company as a C corporation, Articles of Incorporation (sometimes called a Certificate of Incorporation, must be filed with the state and the necessary filing fees paid. Upon incorporation, C corporations are also required to adopt bylaws, hold an initial meeting of directors and shareholders, and issue shares of stock to owners.