What is a C Corporation?
A C corporation is a legal corporation where all the business assets and the personal assets are separated from each other. There is a difference in the personal and business assets of the owners. This process is very profitable for the company and helps the company to make a profit with the double-taxed method. In this, the corporation or the company and the owner of the corporation both pay taxes separately.
C corporation is an independent entity that is owned by the stakeholder of the company. The income of the corporation is double, he/she gets to profit from business and from when the profit is distributed among the stakeholder as the dividend.
Process to Form a C Corporation
- Firstly you need to select the legal name of the company.
- Now prepare a file of your articles of incorporation with the secretary of the state.
- Then issue some stock certificates to the stakeholders of the COMPANY
- Now apply for the license and other permits requires to run and to form the company
- Now apply one form SS-4 at the internal revenue service website for the unique EIN(Employer Identification Number)
- If your local and state government require some number and document the application for that also.
Advantages & Disadvantagesof C Corporation
- Legal protection: A C corporation is having limited liability to its owners because owner personal and business assets are separated from each other, which means if any problem occurs on the company then personal assets are not given or responsible for that.
- Easiest way to raise funds: A C corporation business raises money from investors and now it will very easily for other corporate their structures and he/she can sell their own stocks in the company to raise funds.
- Offer stock: C corporation uses their shares in the company as the way they want to and attract high-quality employees for the higher positions. By allowing them to some stock of share of the company for their company success.
- Well-established Laws: In the older days, it’s very difficult to make corporate laws. With this, it will be easy for the management to understand and predict the legal consequences of the business and accordingly decision will be taken. They make the agreement which will help them to save themselves.
- Tax planning :To run the corporation business may have some complexity, but it also provides us to do a wide manner of tax planning.
- Burden of formal Responsibility: C corporation is very costly to manage and operate. They require hard work and quick reporting ability in all the company affairs, which can be very difficult for smaller companies with limited resources and difficult for the large company to cop us with every affair of the company.
- Double taxation : In this, we have to pay tax on every profit part, whether it is personal and the business profit. In both the profit, we have to bear the tax expenses.