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Documents filed with the state forming your corporation
Personalized bylaws and resolutions defining who owns and manages the company
What is a C corporation?
Any corporation that is taxed separately from its owner is called C corporation under United States Federal Income Tax Law. Even C corporation or C corp is the most common corporation type but still it is not always the top choice for small business owner. Limited Liability protection is provided by C corporations to the owners. Owners are called shareholders in C corporation. Owners are typically not personally responsible for business debts and liabilities. There are many perks in starting a C corporation and one of them is greater tax advantage as it offers an expanded ability to deduct employee benefits, which are most often used by growing business. All for-profit corporations are automatically classified as a C corporation.
Advantages of C corporation
- Under Limited liability protection, Owners are not typically responsible for business debts and liabilities.
- The advantage of having unlimited owners or shareholders is also available under C corporation.
- If any owner of C corporation incurs a disabling illness or dies, the corporation does not cease to exist.
- Since owners who work for the business are classified as employees, C corporation offers self-employment tax savings.
- Less frequently audited than sole proprietorships.
- In comparison to sole proprietorship or general partnership, C corporation may be perceived as a more professional/legitimate entity.
- By selling share of the stock additional capital can be raised.
Disadvantages of C corporation
- “Double-taxation” is the biggest negative aspect of C corporation. Whenever C corporation earns money, it has to pay tax. Everytime corporation issues a dividend then the shareholders are taxed on the amount they receive which results in the income “twice taxed”
- To form a C corporation one has to go through complicated formalities like drafting articles of incorporation and bylaws which asks for details like corporation’s name, address, business purpose, and the name of its registered agent and how many shares of stock will issue.
- C corporation is expensive to maintain. If we consider all the costs associated with preparation of the corporate tax return, compliance with corporate formalities, and the double taxation of corporate profits then a C corporation can be quite expensive to its shareholders.
How to apply for C Corporation
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The basics to get you started
Preliminary corporation name clearance and filing of Articles of Incorporation.
Includes provisions that help protect directors and officers from liability.
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Frequently Asked Questions
Owner Corporation- Parent
Owned Corporation- Subsidiary