The most common type of corporation in the U.S. is the C Corporation.
By forming a C Corporation, business owners create a separate legal structure that helps shield their personal assets from judgments against the company and limit their liability to the value of asset invested by the owner. C Corporations have a specific structure that includes shareholders, directors, and officers.
The C Corporation is a time-tested business formation. It has many advantages, including:
- Limited liability for directors, officers, shareholders, and employees
- Perpetual existence, even if the owner leaves the company
- Enhanced credibility among suppliers and lenders
- Unlimited growth potential through the sale of stock
- No limit on the number of shareholders, although once the company has $10 million in assets and 500 shareholders, it is required to register with the SEC under the Securities Exchange Act of 1934
- Certain tax advantages, including tax-deductible business expenses
The C Corporation structure does have its drawbacks. For instance, a C Corporation’s profits are taxed when earned and taxed again when distributed as shareholders’ dividends, what’s known as “double taxation.” Additionally, many C Corporations are also taxed at the state level where the C corporation is incorporated which could create a scenario of triple taxation. Shareholders in a C Corporation also can’t deduct any corporate losses. To avoid these concerns, many small business owners choose to form an S Corporation instead.
Start Protecting Your Assets by Forming a C Corporation
The Law Offices of Senen Garcia, P.A. can help you form your new C Corporation in any state or the District of Columbia. We’ll help you draft Articles of Incorporation for your business and file them with the state of your choice.
Remember, once you’re incorporated, your C Corporation must adopt bylaws, hold directors’ and shareholders’ meetings, and issue stock to owners. The Company Corporation can help you with these and many other business requirements.
Learn More about C Corporations
At the Law Offices of Senen Garcia P.A., we can answer many of your questions regarding whether this form of organization is right for you.