how to create a c corporation
creating a c corporation is similar to the process of formalizing other types of business entities these are the procedures for establishing one c corporations are the most common type of corporation versus s corporations or llcs advantages and disadvantages of a c corporationc corporations limit the personal liability of the directors shareholders employees and officers in this way the legal obligations of the business cannot become a personal debt obligation of any individual associated with the company the c corporation continues to exist as owners change and members of management are replaced 3a c corporation can have many owners and shareholders however it is required to register with the securities and exchange commission sec when selling securities the ability to offer shares of stock allows the corporation to obtain large amounts of capital which may fund new projects and future expansions 8however there are some drawbacks filing the articles of incorporation for a c corp can be more expensive than other business structures and incur greater legal fees they are also subject to greater regulatory scrutiny which can increase the company s legal expenses there are also tax considerations the profits of a c corporation are effectively taxed twice first when the company files its income taxes and again when those profits are distributed as dividends and unlike an s corp shareholders in a c corporation cannot deduct business losses on their tax returns 29limited liability for directors shareholders and other company officers c corps can raise capital by issuing and selling shares of stock c corporations must register with the sec upon reaching certain thresholds they are subject to greater regulation than other business structures incurring higher legal fees shareholders cannot deduct their losses and business profits are double taxed as dividends are issued c corporation vs s corporationan s corporation is another type of business structure that allows a company to pass its income deductions and losses to its shareholders both a c corp and an s corp offer limited liability protection and the process of incorporation is similar for both the main differences relate to taxation and ownership as explained above one major disadvantage for c corporations is that profits are effectively taxed twice first on the company s income taxes and again when shareholders receive dividends an s corporation is a pass through entity meaning that it does not pay corporate income taxes instead profits are taxed at the shareholder level s corporations also have greater restrictions on ownership while a c corporation can have an unlimited number of shareholders an s corporation can have no more than 100 shareholders in addition an s corp cannot be owned by a c corp other s corps or a limited liability entity 9tax considerationsthe current tax on corporations is 21 president biden has consistently sought to increase the corporate tax rate from 21 to 28 and again proposed this for the 2025 budget this has not been enacted into law but it is on the table as biden included it in the budget proposal he sent to congress for approval 10