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.