Book A Meeting

Definition

A C Corporation (C Corp) is a legal business structure in which the company operates independently from its owners. This distinction provides liability protection to shareholders and grants the corporation the ability to own assets, enter contracts, and assume responsibility for its obligations. In this structure, the corporation is taxed independently. Its profits are subject to corporate taxes, and dividends distributed to shareholders are taxed as personal income.

 

Understanding C Corporations

C Corporations are popular for businesses aiming to grow and attract investment. Their structure makes transferring ownership by selling shares straightforward, which is one reason companies like Apple, Walmart, and Microsoft operate as C Corporations. This framework also allows for a diverse range of shareholders, including international investors, making it ideal for businesses with global aspirations.

 

Characteristics of C Corporations

  • Separate Legal Entity
    The corporation operates independently from its owners and can own property, enter contracts, and take legal action in its name.
  • Unlimited Shareholders
    Shares can be issued to an unlimited number of individuals, businesses, and foreign entities, allowing broad ownership.
  • Double Taxation
    Corporate income is taxed at the company level, and dividends are taxed again as personal income for shareholders.
  • Perpetual Existence
    The corporation remains operational regardless of changes in ownership or management.
  • Compliance Obligations
    C Corporations are required to file annual reports, maintain detailed corporate records, and adhere to formal governance practices.

 

C Corporation Formation Process

Choose a Business Name: Select a unique name that complies with state regulations.

File Articles of Incorporation: Submit this document to the state, detailing the corporation’s name, purpose, address, and initial directors.

Appoint a Registered Agent: Assign an individual or business to handle legal documents.

Create Corporate Bylaws: Establish internal rules for governance and operations.

Appoint Directors and Hold an Initial Meeting: Elect a board of directors and formalize decisions like adopting bylaws and issuing shares.

Issue Shares: Allocate ownership to shareholders through stock certificates.

Obtain an EIN: Register with the IRS for tax purposes.

Comply with Regulations: Acquire necessary permits and licenses and meet state-specific requirements.

 

Taxation of C Corporations

C Corporations are taxed as separate legal entities at a federal corporate tax rate of 21%. This structure results in double taxation, where corporate profits are taxed at the entity level, and any distributed dividends are taxed again as personal income for shareholders. Taxes are filed using IRS Form 1120; deadlines depend on whether the corporation follows a calendar or fiscal year.

 

Comparison with Other Business Structures

Feature C Corporation S Corporation LLC
Taxation Double Taxation Pass-through taxation Pass-through or Corporate Taxation
Shareholder Limits Unlimited Limited to 100, U.S. citizens only Unlimited
Liability Protection Yes Yes Yes
Formalities High  High Low
Raising Capital Easy (can sell stocks) Limited (no public stocks) Limited

C Corporations provide a solid foundation for businesses to scale, secure investment, and protect shareholder interests, making them the definitive choice for companies with long-term growth objectives.

More articles you can read about

Run Rate

Run rate is a financial projection that estimates a company’s future revenue (or other metrics) based on current performance. It’s typically calculated by taking revenue from a recent period, like a month or a quarter, and extrapolating it over a longer timeframe, usually a full year. While run rate isn’t

Read More

Round of Funding

A round of funding is a formal process where startups raise external capital to fuel their growth. Each round typically reflects a stage in the company’s development, from an initial concept or prototype to large-scale expansion or pre-IPO maturity. In exchange for this capital, companies often give up equity, future

Read More

Rolling Forecast

A rolling forecast is a financial planning approach that uses real-time data and updated projections to predict future performance continuously, typically over a consistent forward-looking period like 12, 18, or 24 months. Unlike traditional forecasting methods tied to a fiscal year, a rolling forecast continuously extends the forecasting window, allowing

Read More

Rolling Budget

A rolling budget is a dynamic financial planning method in which budgets are continuously updated—usually monthly or quarterly—to reflect current realities and extend the planning horizon. Unlike traditional static budgets, which are set once a year and remain fixed regardless of actual performance, a rolling budget adjusts as new data

Read More

Roll-Up Vehicle (RUV)

A Roll-Up Vehicle (RUV) is a special-purpose legal entity consolidating multiple investors into a single entry on a startup’s cap table. It’s commonly used in venture deals, particularly for early-stage funding rounds that involve several small-check investors—angel investors, syndicate members, or micro-funds—who want to participate in a round without overwhelming

Read More

Risk Capital

Risk capital refers to the funds invested in a business or project with a high potential for loss but also offers the possibility of substantial returns. It is typically used to finance ventures in their early stages, including startups or new business ventures, which are seen as having higher risks

Read More

Elevate your financial management with Durity! 

Schedule a demo and discovery call to explore:

  • Our comprehensive accounting, tax, and compliance solutions
  • How we simplify and optimize your financial processes for efficiency
  • What sets us apart from traditional firms, freelancers, and in-house teams (hint: our expert-driven approach ensures faster and more accurate results)
  • The subscription plan that best fits your business needs
Durity simplifies accounting, tax, and compliance for businesses, managing the numbers so you can focus entirely on growing your business.

CONTACT INFO

Follow Us

© 2026 Durity. All rights reserved.