What Is A C-Corp
What is a C-Corp?
A C corporation (also known as a C-corp) is a type of business entity that is separate from its owners. This means that the owners of a C corporation are not personally liable for the debts and liabilities of the business. C corporations are also subject to double taxation, which means that the business is taxed on its profits, and then the shareholders are taxed on any dividends that they receive from the business.
Benefits of a C Corporation
There are a number of benefits to forming a C corporation, including:
- Limited liability: As mentioned above, the owners of a C corporation are not personally liable for the debts and liabilities of the business. This means that if the business is sued or goes bankrupt, the owners’ personal assets are not at risk.
- Access to capital: C corporations are able to raise capital by selling shares of stock. This can be a valuable way to finance the growth of a business.
- Perpetual existence: A C corporation is a perpetual entity, which means that it can continue to exist even if the original owners sell their shares or die. This can be a valuable benefit for businesses that want to plan for the long term.
- Professional image: C corporations are often seen as more professional and reputable than other types of business entities. This can be a valuable asset for businesses that are trying to attract customers or investors.
Steps to Forming a C-Corp
The steps to forming a C corporation vary from state to state, but generally include:
- File articles of incorporation with the state.
- Choose a registered agent.
- Obtain an Employer Identification Number (EIN).
- Open a business bank account.
- Issue shares of stock.
- Adopt bylaws.
- Hold an organizational meeting.
Conclusion
C corporations can be a good choice for businesses that need limited liability, access to capital, and a perpetual existence. However, it is important to note that C corporations are also subject to double taxation. If you are considering forming a C corporation, it is important to weigh the benefits and drawbacks carefully.
Call to Action
If you understand what a C-corp is, you can contact a qualified attorney or business formation service for assistance.