C Corporation.

 

Advantages of a C Corporation

There are many benefits of a C Corp. Below are just a few that stand out.

  • Limited liability. This applies to directors, officers, shareholders, and employees.
  • Perpetual existence. Even if the owner leaves the company.
  • Enhanced credibility. Gain respect among suppliers and lenders.
  • Unlimited growth potential. The sky’s the limit thanks to the sale of stock.
  • No shareholders limit. However, once the company has $10 million in assets and 500 shareholders, it is required to register with the SEC under the Securities Exchange Act of 1934.
  • Certain tax advantages. Enjoy tax-deductible business expenses.

 

Disadvantages of a C Corporation

Having unlimited growth comes with a few minor setbacks.

  • Double taxation. It’s inevitable as revenue is taxed at the company level and again as shareholder dividends.
  • Expensive to start. There are a lot of fees that come with filing the Articles of Incorporation. And C Corporations pay fees to the state in which they operate.
  • Regulations and formalities. C Corps experience more government oversight than other companies due to complex tax rules and the protection provided to owners from being responsible for debts, lawsuits, and other financial obligations.
  • No deduction of corporate losses. Unlike an S Corporation (S Corp), shareholders can’t deduct losses on their personal tax returns.
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