C Corporation

C Corporation Meaning

In most cases, a C Corporation turns out to be one of the most overlooked options for a small-scale business owner. However, as a business owner, when you choose to operate as a C Corporation, it can deliver substantial benefits than other types of businesses like LLC (Limited Liability Corporation).

As per the C Corporation meaning, it is defined as the legal entity that helps in protecting the personal assets of the owners from the creditors. C Corp can feature an unlimited number of owners along with multiple stock classes. The respective characteristics and additional advantages serve as the perfect ground for attracting venture Capital along with other types of financing options.

In contrast to the LLC or S Corporation (Corporation meeting specific requirements for the Internal Revenue Code), it helps in paying Taxes at the high-end corporate level. However, a C Corp might be subject to the demerit of double taxation. At the same time, it is also expected to comply with several types of state and federal requirements in comparison to the LLC.

How Does C Corp Work?

Corporations are known to pay corporate taxes on the respective Earnings before the distribution of the remaining amounts to the given shareholders as dividends. Individual shareholders remain subjected to personal Income taxes on the respective dividends received by them.

A C Corp is expected to organize at least one meeting every year for the respective directors and shareholders. Moreover, a C Corp is also expected to keep the respective voting records of the directors of the company along with the list of the names of the owners as well as ownership percentages. C Corps are known to file annual reports, financial statements, and financial disclosure reports.

Advantages of C Corporations

Some of the potential benefits of C Corporations are:

Limited liability

It tends to be an individual legal entity, the respective liabilities of the business organization tend to be separate from that of the directors, shareholder, and investors.

Existing independently of its owners

This type of corporation is known to feature “perpetual existence.” This is quite a contrast to partnerships or sole proprietorships wherein a business can exist as long as owners tend to be in the business.

Ownerships can be transferred and fluid

Ownership in a typical C Corp tends to be decided by those who are capable of stocking the respective issues. The stocks can be then bought & sold between the investors.

Ease of access to respective funding

When a C Corp wishes to raise money, it can organize the IPO (Initial Public Offering) in which it can go public while offering shares for the sale on the stock exchange. This can help in bringing in a significant amount of money into the business.