C Corporation

A C Corporation is a completely separate tax and legal entity from its owners, and owners who work in the business are treated and taxed as employees of the corporation (Note: The "C" in C Corporation refers to a subchapter of the tax code; C-Corporations are one of the most common firms of corporations, and they are frequently referred to generically as corporations).

C Corporations are subject to corporate income taxes separate from the owners, where most other forms of business entity allow for the company profits to "pass-through" to the personal income tax statements of the owners. As such, C Corporations are the most formal business entity and they have greater tax reporting responsibilities than other business entities. C Corporations allow for profits to be retained in the business, if desired, and frequently these profits can be taxed at a lower rate than personal income. C Corporations can also pay out after tax profits to its owners in the form of dividends, but this can also lead to double taxation.

Entity Comparison Chart
	C Corporation	S Corporation	LLC
Owners have limited liability for business debts and obligations
Created by a state-level registration that usually protects the company name
Business duration can be perpetual
May have an unlimited number of owners
Owners need not be U.S. citizens or permanent residents
May be owned by another business, rather than individuals
May issue shares of stock to attract investors
Owners can report business profit and loss on their personal tax returns
Permitted to distribute special allocations, under certain guidelines
Not required to hold annual meetings or record meeting minutes
Owners have NO personal liability for business obligations
Number of owners allowed	1 to unlimited	1 to 100	1 to unlimited
Management decisions made by...	Board of Directors	Board of Directors	Members
Raising Capital	Sale of stock & other permitted instruments	Sale of stock & other permitted instruments	From the members
Income Taxes	Paid by the corporation	Passed through & paid by the shareholders	Paid by members unless elect corporate tax status
Who Deducts Losses	Corporation	Passed through to the shareholders	Special rules apply - check with tax advisor
Taxation	Double; both the corporation and shareholders are taxed	Taxed Once	Taxed Once
Transfer of ownership	By stock transfer	By stock transfer	Most LLC Agreements require approval of members

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