How are C-Corporations Taxed?

By Greg Lindberg, Writer

Do you have plans to launch a brand new small business? Are you ready to take the dive toward a profitable and rewarding future? If you intend to become a newly crowned business owner, it is vital to ensure you know what types of business structure options exist so that you choose the one that is most appropriate for you. This includes understanding how each type of business entity is taxed. One option is to go with a C corporation, which is considered the most traditional type of business structure.

When it comes to filing federal taxes, the IRS treats C corporations as separate business entities. A C corporation can be created when there is an exchange of money or property among prospective shareholders who make up a business. This is done for the capital stock of the business. The advantage of a C corporation is that it typically can claim more tax deductions than the ones available to sole proprietorships or partnerships when calculating their amounts of taxable income. Tax deductions can lead to big savings, helping small business owners hold on to more of the income their companies bring in.



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