Overview of C Corporations
C corporations (C corps) are a legal structure for a corporation that allows owners to pay taxes separately from the entity and are subject to corporate income tax.
Key Differences from S Corporations and LLCs
- C corps differ from S corporations and limited liability companies (LLCs) in terms of structures and tax treatments.
- C corps freely transfer interests and access funding by selling stock.
- They allow multiple classes of stock and cater to institutional investors, partners abroad, and overseas sales.
Tax Implications
- C corps face double taxation – federal corporate taxes plus personal taxes.
- Shareholders can receive income through a mix of salary and dividends, and profits can be distributed among shareholders.
How Are C Corp Owners Paid?
Owners of C corporations are paid through separate transactions from the entity, experiencing double taxation at both corporate and personal levels.
Cash Contribution to C Corp
Contributing cash to a C corp may have tax implications based on the assets and liabilities transferred from an LLC to the new corporation.