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What is a Texas C Corporation?
- A C Corp in Texas is a legal business structure offering liability protection and potential tax benefits.
- Key steps to form a C-Corp in Texas include preparing formation documents and filing with the Secretary of State.
Key Points of a C Corporation
- A C corporation has the same status as Fortune 500 firms, offering limited liability protection and flexibility in ownership.
- However, C corporations face double taxation – both the corporation and shareholders pay taxes on profits.
Difference Between S Corp and C Corp in Texas
- The main difference between an S-corp and a C corp is that an S corp is given more tax benefits, functioning as a flow-through tax entity.
- Requirements for an S-Corporation include having fewer than 100 shareholders, all being individuals, among other criteria.
Venture Capital and Angel Investors
- Venture capital firms and angel investors prefer holding preferred stock in a C corporation due to the option for one class of stock, facilitating fundraising.
- In contrast, an S corp can have up to 100 shareholders, who must be United States citizens or resident aliens.
