A C-Corporation is a unique and complex “beast” compared to the other business entity forms. The C-Corporation is a completely separate legal entity and is controlled by a board of directors. Shareholders of the Corporation elects the board members who will direct the business of the business. Those board members then delegate the day-to-day business operations to managers who carry out the directives of the members of the board.
A C-Corporations biggest benefit is its protection from liabilities. The biggest disadvantage is the double taxation. When the company makes money, the company itself is taxed. Then when its profits are divided up among the owners (shareholders), those shareholders are then taxed on those profits; double taxation.
Another downfall to C-Corporations are the strict requirements the business must comply with; regular meetings, minimum number of members and regular filings with the Secretary of State.
All that being said, a C-Corporation could be the best option for your business.
If you’re interested in learning more about the benefits and downfalls of a C-Corporation, check out our blog post Choosing a Business Entity.
Contact Howard Haake at (314) 325-9868 or (636) 332-5555 for more information about choosing which business entity is best for your business.