Not sure if a C Corp is for you?
Answer a few quick questions, and our Help Me Choose tool can help you move closer to finding the right business structure fit.
C CORP
What is a C Corp?
In a C Corp, your company is positioned as a legal entity separate from its owners or shareholders. Most traditional corporations, like the ones that are traded on the stock market, are C Corp.
How can a C Corp help your business?
Typically, C Corps are larger businesses with more complex needs. The core advantages of the structure can help such business continue their growth trajectory.
Increased protection
Forming a C Corp can help limit your personal responsibility for certain business liabilities.
Room to grow
C Corps have no limits on the number of shareholders and can have foreign owners.
Connection to capital
A C Corp can raise money by selling stock to investors and become publicly traded.
Compare C Corp to other business structures
| Provides limited liability protection |
Provides limited liability protection |
Provides limited liability protection |
Provides limited liability protection |
Provides limited liability protection |
|---|---|---|---|---|
| Can be for solo business owners |
Can be for solo business owners |
Can be for solo business owners |
Can be for solo business owners |
Can be for solo business owners |
| Can be for businesses with multiple owners |
Can be for businesses with multiple owners |
Can be for businesses with multiple owners |
Can be for businesses with multiple owners |
Can be for businesses with multiple owners |
| Income is reported on business owner’s individual tax return |
Income is reported on business owner’s individual tax return |
Income is reported on business owner’s individual tax return |
Income is reported on business owner’s individual tax return |
Income is reported on business owner’s individual tax return |
| Can apply for 501(c)(3) status in certain circumstances |
Can apply for 501(c)(3) status in certain circumstances |
Can apply for 501(c)(3) status in certain circumstances |
Can apply for 501(c)(3) status in certain circumstances |
Can apply for 501(c)(3) status in certain circumstances |
| Businesses making at least 40K in annual profit may see a tax benefit |
Businesses making at least 40K in annual profit may see a tax benefit |
Businesses making at least 40K in annual profit may see a tax benefit |
Businesses making at least 40K in annual profit may see a tax benefit |
Businesses making at least 40K in annual profit may see a tax benefit |
| Pays owner out a salary for services provided |
Pays owner out a salary for services provided |
Pays owner out a salary for services provided |
Pays owner out a salary for services provided |
Pays owner out a salary for services provided |
| Can issue stock |
Can issue stock |
Can issue stock |
Can issue stock |
Can issue stock |
| Double taxation applies |
Double taxation applies |
Double taxation applies |
Double taxation applies |
Double taxation applies |
| Must appoint a board of directors |
Must appoint a board of directors |
Must appoint a board of directors |
Must appoint a board of directors |
Must appoint a board of directors |
Tax implications for your business:
As a C Corp, the entity pays corporate income tax and must file a separate tax return for the business. The shareholders pay tax on their individual dividends. Visit our resource center to examine the key tax considerations for different types of corporations.
Other considerations
-
Often used by larger companies with many employees
-
Can have owners who are not U.S. citizens or residents
-
Must appoint officers and maintain a board of directors
-
Most states will require an annual report filing
-
Quarterly tax payments are generally also required
-
Comes with more complicated corporate governance and compliance formalities
Ready to learn more about business services?
Let’s start saving you time and money with affordable, year-round expertise.
Frequently asked questions
Most traditional corporations like the ones that are traded on the stock market are C Corp. A C Corp is a tax status that is subject to double taxation — the C Corp pays tax on its income and the shareholders pay tax on the dividends they receive from the corporation. The corporate tax rate is less than the individual tax rate.
The main difference in the way the business is taxed. C Corp are taxed twice — the business pays taxes, as do the shareholders on their profits. When a business takes an S Corp election, only the shareholders pay taxes on their profits.
Read on to learn more detail about different business structures.
First, you form a corporation by filing incorporation documents with a state’s Secretary of State’s office. To do that with Block Advisors, you’ll need to choose a business name, appoint directors, file articles of incorporation, create bylaws, ensure you’re keeping accurate books and records, and issue stock. As you operate your business, the corporation’s default federal tax status will be a “C Corp” unless you make a valid S Corp election.
An EIN is an employer identification number and is needed in certain situations. For example, partnerships and corporations are required to have an EIN. Sole proprietorships and LLCs that have employees, pay excise tax, or contribute to a retirement plan also need an EIN. EINs are included with all of our packages.
We’ve got the expert insights your business needs
Check out our resource center to learn more about taking your business from self-employed to an LLC, C Corp, or S Corp.