Categories: Business Entities

What is a C Corporation

For our third installment of the ABC’s for small business, we decided that we liked the letter “C” so much that it had to stay in our word of choice – literally! C-corps are organization structures for businesses that provide non-tax benefits with profits taxed separately from its owners. Beyond just taxing profits separately, c-corps also have the distinction of being separate entities from their owners entirely in both control and management and as such, may go public and raise investment capital, engage in business, and initiate lawsuits.

Last March we did a post on C-Corp 101 and the four considerations to making your business tax efficient, provided below for a quick recap:

1. Pass through of gains
2. Pass through of losses
3. Transfer of assets to the entity, and
4. Transfer of assets from the entity

Let’s focus on some of the benefits mentioned earlier with having a C-Corporation, particularly where taxes are concerned.

Limited Liability

If you own a c-corp, you are not personally liable for the debts that your corporation incurs. This is extremely important because it means that you can’t be sued for what goes on within the company or lose all of your personal assets in the process.

Benefits = Business Expenses

If you want to give your employees health insurance packages and dental plans, you can write off these benefits as business expenses and even ensure that they arrive tax-free!

Auditing?

By forming a c-corp, as opposed to a sole proprietorship or LLC, you’re at a much less risk of being audited by the government than your counterparts are.

Unlimited Stockholders

An unlimited amount of stockholders allows your corporation the ability to sell shares to more investors increasing the amount of funding you receive in return.

Deborah Sweeney

Deborah Sweeney is an advocate for protecting personal and business assets for business owners and entrepreneurs. With extensive experience in the field of corporate and intellectual property law, Deborah provides insightful commentary on the benefits of incorporation and trademark registration. Education: Deborah received her Juris Doctor and Master of Business Administration degrees from Pepperdine University, and has served as an adjunct professor at the University of West Los Angeles and San Fernando School of Law in corporate and intellectual property law. Experience: After becoming a partner at LA-based law firm, Michel & Robinson, she became an in-house attorney for MyCorporation, formerly a division in Intuit. She took the company private in 2009 and after 10 years of entrepreneurship sold the company to Deluxe Corporation. Deborah is also well-recognized for her written work online as a contributing writer with some of the top business and entrepreneurial blogging sites including Forbes, Business Insider, SCORE, and Fox Business, among others. Fun facts/Other pursuits: Originally from Southern California, Deborah enjoys spending time with her husband and two sons, Benjamin and Christopher, and practicing Pilates. Deborah believes in the importance of family and credits the entrepreneurial business model for giving her the flexibility to enjoy both a career and motherhood. Deborah, and MyCorporation, have previously been honored by the San Fernando Valley Business Journal’s List of the Valley’s Largest Women-Owned Businesses in 2012. MyCorporation received the Stevie Award for Best Women-Owned Business in 2011.

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