C-Corporations are separate legal entities. That entity can enter into contracts, and can sue and be sued. The primary benefit of a corporation is that shields the personal assets of the owners (shareholders) from business liabilities. C-Corporations can have unlimited shareholders, a perpetual existence, and unlimited growth potential. The corporation is run by a board of directors and officers.
However, there are tax considerations when forming a C-Corporation. The C-Corporation is subject to “double taxation,” meaning that the business profits are taxed when earned and taxed again when distributed to shareholders as dividends. Also, individual shareholders cannot deduct corporate losses on their individual returns.
If your business will be formed by individuals licensed to perform professional services, then you should consider forming a Professional Corporation (P.C.). The shareholders, directors, and most officers must be individual licensed professionals. Professional Corporations may elect, for tax purposes, to be treated as a C-Corporation or an S-Corporation.
We can help you decide if a C-Corporation is the right choice of entity for your business.