A C corporation is a traditional business structure that is a separate legal entity from its owners. This means that the business itself is responsible for its debts and legal issues, and the owners, called "shareholders," are not personally liable. C corporations are able to issue stocks, which can be a powerful tool for raising capital and growing the business.
One of the main advantages of a C corporation is that it offers limited liability protection to its shareholders. This means that the shareholders are not personally liable for the company's debts and legal issues. This can provide peace of mind to business owners, as it protects their personal assets, such as their homes and savings, in the event that the corporation is sued or incurs debts.
C corporations are also able to raise capital through the sale of stocks. Investors can buy shares of the company and become shareholders, which can provide the company with a source of capital. This can be a powerful tool for growing and scaling the business.
C corporations are taxed as separate entities, which means that they are subject to corporate income tax on their profits. However, they can also offer shareholders dividends, which are distributions of the company's profits. These dividends are taxed at the individual level, which can result in double taxation if the company is not careful.
Forming a C corporation is relatively simple and can be done online in most states. To form a C corporation, you will need to choose a business name and file articles of incorporation with your state's corporation division. You may also need to draft bylaws, which outline the rules and procedures for running the corporation, and hold an organizational meeting.
Once your C corporation is formed, you will need to follow certain ongoing requirements, such as holding annual meetings and keeping accurate financial records.