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Why choose a C-Corporation?

 

When registering a company, C corporation or (C corp.) is the most common corporation type, but it isnt 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 corporations 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.