The most common type of corporation in the U.S. – and with good reason is the C- corporation. C corporations (c corps) offer unlimited growth potential through the sale of stocks, which means you can attract very wealthy investors. Plus, there is no limit to the number of shareholders a c corp can have.
Additional Advantages of a C Corporation
There are many benefits of a c corp. Below are just a few that stand out:
Limited liability.
Perpetual existence. Regardless if the owner dies or leaves the company.
Enhanced credibility. Gain respect among suppliers and lenders.
Unlimited growth potential. The sky's the limit thanks to the sale of stock.
No shareholders limit. However, once the company has $10 million in assets and 500 shareholders, it is required to register with the SEC under the Securities Exchange Act of 1934.
Certain tax advantages. Enjoy tax-deductible business expenses.
C Corporation vs. S Corporation
Both c and s corps offer limited liability protection. Both require Articles of Incorporation to be filed. And both comprise shareholders, directors, and officers. There are lots of similarities, but they differ in the complex realm of taxation and corporate ownership.
As mentioned above, c corps are subject to double taxation while s corps are pass-through tax entities, allowing them to avoid being taxed at the corporate level and again on shareholders' personal income taxes.
When it comes to corporate ownership, c corps have no restriction on ownership, which goes back to the point about them having unlimited growth potential. But s corps don't have that luxury as they're restricted to no more than 100 shareholders. Also, s corps cannot be owned by a c corp, other s corps, LLCs, partnerships, or many trusts. But a c corp has no limits on who or what can be a shareholder.
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