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Simply put, C-Corporation is a method of legally recognizing a business for official purposes i.e. taxes and regulations. C-Corporation or C-Corp structures the ownership of a business. It allows or wider ownership options of a corporation, though it could also consist of a singular person.
C-Corps are taxed as separate business entities. They can also retain some part of the profits earned, sheltering some of the profits from taxation. C-Corp business structures are better suited for larger businesses as they are more attractive for investors, shareholders and venture capitalists! If you’re looking for wide ownership in your business, C-Corp is the way to go!
If you’re aiming towards acquiring a fixed structure or your business that provides security, burden-free record-keeping and company maintenance, then choosing a C-Corp for your business is the way to go! This structure type allows you to choose how your business too! C-Corp have the goal of raising more money and company growth which is a bonus indeed.
C-Corp help you attract investors which are essential in running a large company. It allows for talented employees to take interest in your company and provides you with the best services in turn! With a C-Corp, your business will flourish as it will become easier to collaborate with other companies as well! Additionally, C-Corp ensure you and other shareholders aren’t personally affected in case of company debt and possible liabilities.
C-Corp are designed to protect an owner’s personal assets from creditors. Since it also allows or multiple owners, they are all protected from having their personal assists being at risk under a C-Corp! There are no restrictions on who can hold a share alongside readily transferable shares.
Evidently, C-Corp are more costly to maintain and administer due to their extensive record-keeping and compliance with regulations. Whilst this will leave a mark on your wallet, C-Corp also implement double taxations. This means the corporation is taxed on two levels: a corporate rate and any dividends issued to the shareholders are taxed at the individual income tax rates.
The defining difference between C-Corp and S-Corp is how the corporations pay taxes. In a C-Corp, double taxations are applied; the government will income tax the business revenue on a corporate level, as well as require shareholders to pay tax on their dividends. Meanwhile S-Corp make use of a pass-through basis of taxation. Another core difference between the two structures is that S-Corp are made up of less than a 100 shareholders whereas there is no limit on shareholders in a C-Corp.
Corporations offer more clout in attracting investors and make doing business easier with other companies.
Corporations separate your assets from being at risk in case of your business getting sued or going into debt etc.
C-Corp have no limits on the members having shares in the company. Whereas with S-Corp you have a limit of about a 100 shareholders.
You can switch to a C-Corp by gaining majority shareholder consent in doing so before official changing the status of your corporation with the IRS.
There are many advantages and disadvantages to both! Get in touch with Bizncorp to help you decide which options suits your business needs!
S-Corp make use of 'pass-through taxes', meaning the income is circulated amongst shareholders before corporate taxations.
The government imposes taxes on business revenue and requires shareholders to pay taxes on their dividends.