ContractsCounsel Logo

C Corp

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 9,853 reviews
No Upfront Payment Required, Pay Only If You Hire.

Jump to Section

What is an C Corp?

When you decide to incorporate your business, one option for formation is a C Corp. A C Corp is a common type of corporation in the United States because it allows a business owner unlimited shareholders and attractive tax benefits.

A C Corp is like an S Corp or an LLC in that it offers liability protection for its owners. A C Corp is considered a separate entity from the owners, so an owner’s personal assets are protected in the event of a lawsuit against the company.

The biggest difference between a C Corp and an S Corp or LLC is the tax structure. C Corps are subject to federal corporate taxes which leads to a situation of “double taxing”. This may make a C Corp sound unappealing, however, C Corps also benefit from other tax advantages that are not available to S Corps or LLCs, such as the ability to carry profits and losses forward and backwards, which can help offset income in other years.

A C Corp must follow certain requirements although they are far less regulated than an S Corp. Some of these requirements include:

  • Election of a board of directors
  • At least one meeting per year for the directors and shareholders
  • Records of minutes kept at these meetings
  • Maintain voting records
  • Maintain a list of all owner’s names and ownership percentages
  • Have corporate bylaws
  • File annual reports, financial disclosure reports, and financial statements

A C Corp, although more complicated and expensive to maintain than an LLC or S Corp, is a great option for businesses that are medium or high risk, businesses that plan on raising funds through stock sales, or a business that wants to eventually go public.

For more information about C Corps, click here.

C Corp Advantages and Disadvantages

C Corps have both advantages and disadvantages for business owners. When you are deciding how to incorporate your business, you may want to meet with a corporate lawyer to help decide which structure suits your needs. It is important to consider all the advantages and disadvantages before making your decision.

Advantages of a C Corp

  • Liability Protection: Corporations offer the strongest protection against personal liability for owners. Directors, officers, shareholders, and employees are all protected under a C Corp.
  • Unlimited Growth Potential: Unlike an S Corp, there are no limitations on the number of shareholders a C Corp can have. There is also no limit on the sale of stock.
  • Perpetual Existence: The owner or shareholders can leave the company without effecting the company
Meet some lawyers on our platform

Benjamin W.

74 projects on CC
View Profile

Danny J.

4 projects on CC
View Profile

Sara S.

106 projects on CC
View Profile

Gregory B.

163 projects on CC
View Profile

Disadvantages of a C Corp

  • Double Tax: A C Corp, unlike an S Corp, is taxed as a corporation. This means it is subject to federal taxes as a corporation and then shareholders must pay taxes again on dividends
  • Expensive Fees: There are numerous expensive fees that go along with the formation of a C Corp. This can be burdensome for a new business.
  • No Deduction of Corporate Losses: Shareholders in a C Corp cannot deduct losses from their personal tax returns like shareholders of an S Corp.

For more help with choosing a business structure, read this article.

How is a C Corp Taxed?

A C Corp is taxed as a corporation and is completely separate from its owners in the eyes of the IRS. A C Corp first pays taxes at the corporate level and then each shareholder will be required to pay taxes on the dividends they received from the corporation at a personal level.

This form of double taxation is often looked at in an unfavorable light, however owners of a C Corp can take advantage of many tax benefits to offset this double tax and lower their tax burden.

Some advantages to a C Corp Tax Structure include:

  1. Potential to Minimize Overall Tax Burden: Business owners can opt to only take a salary rather than taking a dividend because salaries are not taxed at a corporate rate
  2. Ability to Carry Profits and Losses Forward and Backward: C Corps have flexibility in determining their fiscal year. This allows shareholders to shift income between different years and decide when to pay taxes on bonuses or when to take a loss.
  3. Option to Accumulate Funds at a Lower Tax Cost: C Corps allow shareholders to retain income within the company because profits from a C Corp do not appear on a shareholder’s personal tax return.
  4. Salary and Bonus Write Offs: Unlike an S Corp, the shareholders of C Corps can act as employees in the corporation and take a salary. This allows the corporation to deduct these salaries as payroll taxes. Essentially, the C Corp can pay their employees to offset any taxable profits. This allows shareholders to avoid the double tax.
  5. Fringe Benefits: Fringe benefits allow a C Corp to take advantage of many large tax write-offs. The only stipulation is that the company must offer the same benefit to all employees. Some benefits eligible for write-offs include medical reimbursement plans, long term care, and disability insurance.
  6. Charitable Contributions: C Corps can deduct any charitable contributions from their taxes as long as the contribution is no more than 10% of their taxable income.
  7. Carry Losses Over Multiple Years: C Corps can take more operating losses than an LLC or S Corp with less scrutiny from the IRS. This is beneficial for new, growing companies.
  8. Less Ownership Restrictions: While an S Corp is subject to many strict regulations set forth by the IRS, C Corp owners benefit from more flexibility and less restrictions. A C Corp can have unlimited owners, including foreign owners, and can have more than one class of stock.
  9. Financing: Because C Corps are more flexible and less restrictive than an S Corp, they are more appealing for venture capitalists to invest in.

ContractsCounsel C Corp Image

Image via Pexels by jiawei cui

C Corp vs. S Corp

A C Corp and an S Corp are both types of corporations and are very similar in how they are formed and run. Both corporations require a board of directors, corporate bylaws, annual meetings, and record of minutes. Both types of corporations protect their owners from personal liability and allow the sale of stock.

The two biggest differences between a C Corp and an S Corp are the tax structure and the restrictions that each corporation is subject to.

S Corps are pass-through entities so profits and losses flow through the company and are reported on the individual tax returns of the owners. In a C Corp, the business and the owners are treated as separate entities. A C Corp is subject to both corporate taxes and then owners are again taxed on dividends they received.

C Corps benefit from less restrictions than an S Corp including more flexibility with ownership regulations and stock options. Less restrictions allow a C Corp more growth potential than an S Corp. For example, an S Corp is limited to 100 shareholders that must be US citizens or permanent residents while a C Corp has no limit on shareholders, and they can be from anywhere.

Read this article to learn more about the characteristics of a C Corp.

Forming a C Corp

After you have decided to incorporate your business and you have chosen a C Corp as your business structure, you can follow these steps to form your C Corp:

  1. Choose and Register a Name : You must choose a name that is not currently being used and register your name with the Secretary of State.
  2. File Articles of Incorporation: Articles of incorporation must be filed with the Secretary of State and each state has different rules and filing procedures for this document.
  3. Issue Stock: Upon the creation of the business, stock certificates must be issued to the initial shareholders making them official owners of the corporation.
  4. Licenses and Certificates: Depending on your business and which state you are located; you may need special licenses and certificates to run your corporation. Check with your local state laws to see if this applies to your company.
  5. Employer Identification Number: You will need an employer identification number or EIN to open a business bank account or hire employees. You can get your EIN through the IRS website.
  6. Elect a Board of Directors: Every corporation, S Corps included, must elect a board of directors who oversee the management of the company.

If you would like more information about forming a C Corp, click here.

Get Help Creating a C Corp

Do you have questions about forming an C Corp and want to speak to an expert? Post a project today on ContractsCounsel and receive bids from corporate lawyers who specialize in C Corp formation.

Need to form a C Corporation?

Create a free project posting

Meet some of our C Corp Lawyers

Max M. on ContractsCounsel
View Max
4.9 (20)
Member Since:
July 12, 2021

Max M.

Business Attorney
Free Consultation
Baltimore, Maryland
17 Yrs Experience
Licensed in MD
Georgetown University Law Center

Results oriented business attorney focusing on the health care sector. Formerly worked in Biglaw doing large multi-million dollar mergers and acquisitions, financing, and outside corporate counsel. I brought my skillset to the small firm market, provide the highest level of professionalism and sophistication to smaller and startup companies.

Daniel R. on ContractsCounsel
View Daniel
5.0 (52)
Member Since:
January 2, 2023

Daniel R.

Business and Real Estate Atttorney
Free Consultation
New York
28 Yrs Experience
Licensed in NY
New York Law School

NY Admitted Lawyer 20+ years of experience. Focused on Startups , Entrepreneurs, Entertainers, Producers, Athletes and SMB Companies. I have been a part of numerous startups as Founder, CEO, General Counsel and Deal Executive. I have been through the full life cycle from boot strap to seed investors to large funds-public companies to successful exit. Let me use my experiences help you as you grow your business through these various stages. We saw a market for an on-line platform dedicated to Virtual General Counsel Services to Start Ups and Private Companies.

Joshua B. on ContractsCounsel
View Joshua
5.0 (5)
Member Since:
September 19, 2023

Joshua B.

Of Counsel
Free Consultation
Austin, Texas
22 Yrs Experience
Licensed in TX
University of Texas

Josh Bernstein has been serving real estate and corporate transactional clients since 2002. His experience is varied, and he enjoys working on and puzzling out novel and complex corporate and real estate matters. Josh’s experience includes, among other things, the following: representation of public companies in connection with SEC reporting and compliance work (proxies, 10-K’s; 10-Q’s; 8-K’s, etc.); representation of public and private company securities issuances (including private placements, and other similar offerings); assistance in structuring and drafting joint ventures, both for investors and operating partners, and including both real estate and corporate ventures; handling public and private company mergers and acquisitions; and asset sales and dispositions; assisting clients, big and small, with real estate acquisitions, sales and financings; managing large-scale and multi-state real estate portfolio acquisitions, dispositions and financings; complex condominium creation, structuring and governance work, including: commercial condominiums, use of condominiums as a land planning tool, wholesale condominium property acquisitions and dispositions, and rehabilitating failed or faulty condominium legal structures to make ready for sale; development of restrictive covenants and owners’ association documents for master-planned communities; compliance with federal statutes governing real estate sale and development (including, without limitation, the Interstate Land Sales Full Disclosure Act, the Housing for Older Persons Act, and the Americans with Disabilities Act); representation of real estate lenders, for both improved and unimproved property, and including numerous construction financings secured by real estate; assistance with commercial leasing; from both the landlord and tenant side, and including condominium leasing; training residential home and condominium sales staff for compliance with applicable local and federal law; and workouts of all kinds. When he’s not busy lawyering, Josh may be found watching 80’s commercials, flying a single-engine plane, playing poker, or trying to be a good dad.

Igor B. on ContractsCounsel
View Igor
5.0 (3)
Member Since:
May 4, 2022

Igor B.

Attorney
Free Consultation
Atlanta, GA
14 Yrs Experience
Licensed in GA
Georgia State University College of Law

As a corporate lawyer, I have dealt with international transactions, complex litigation and arbitration, regulatory compliance, and multijurisdictional tax planning. In March 2021, I started my firm and shifted my professional focus to working with start-ups, small businesses, entrepreneurs, and families. I help my clients structure and run their businesses and take care of their assets, including intellectual property issues and estate planning for their families. I try to bring big law quality and small firm personal attention to every client.

Aaron B. on ContractsCounsel
View Aaron
Member Since:
April 27, 2022

Aaron B.

Owner
Free Consultation
Hawthorne, New York
20 Yrs Experience
Licensed in NY
Touro College, Jacob D. Fuchsberg Law Center

I have been in practice for over 19 years. I have substantial experience across the spectrum of civil practice areas both as a litigator and transactional counsel. This includes: negotiating commercial and real estate transactions, corporate organization, commercial agreements, and resolving commercial disputes, and litigating numerous civil, administrative, and criminal cases through all phases of litigation from trial through appeal, as well as judgment enforcement. My vast experience as a litigator is an asset to my transactional clients. My background in Investigating and proving the breakdown of business relationships in court allows me a unique advantage in drafting, negotiating, and closing business transactions.

Dan P. on ContractsCounsel
View Dan
Member Since:
May 2, 2022

Dan P.

Attorney
Free Consultation
New York
17 Yrs Experience
Licensed in NY
University of San Francisco School of Law

I primarily work with small businesses and the self-employed. I help my clients build sustainable businesses, navigate risk, and resolve conflicts. Most of my cases involve contract review, drafting, negotiation, and disputes; I also work on business entity formation, employment and independent contractor issues, copyright licenses, trademark registration, and more.

Cindy A. on ContractsCounsel
View Cindy
Member Since:
May 5, 2022

Cindy A.

Contracts Manager
Free Consultation
Durham, NC
10 Yrs Experience
Licensed in NC
NCCU

Attorney that has worked in both litigation and transactional fields. Motivated and personable professional. Speaks fluent Spanish and very basic Portuguese.

Find the best lawyer for your project

Browse Lawyers Now

Business

C Corp

Texas

Asked on Jul 9, 2023

C corp legal requirements?

I am planning to start a business and am considering a C corporation structure. I am looking for information on the legal requirements associated with setting up and operating a C corporation. I would like to know what documents I need to file, what taxes I will need to pay, and what other regulatory requirements apply.

Wendy C.

Answered Jul 18, 2023

Texas Secretary of State has a ton of helpful resources, including what documents to be filed, what taxes to be paid, and others. With regards to applicable law or which regulators your business will be subject to, you may want to discuss the nature of your business with your preferred counsel. You should also look into the duties/responsibilities of owning or holding a certain position in your company. There are also post-obligations or tasks that the company has to undertake after being registered, like adopting your Bylaws and naming your officers/directors/c-level executives.

Read 1 attorney answer>

Litigation

C Corp

Ohio

Asked on May 28, 2023

C corp and indemnification?

I am the CEO of a small C Corp. Recently, my company has been sued by a customer for a breach of contract. I am concerned about the potential financial and legal implications of this lawsuit and want to understand the rules and regulations around C Corp and indemnification. In particular, I am interested in understanding how C Corp indemnification works and what I can do to protect myself and my company from liability.

Paul S.

Answered Jun 23, 2023

Depending on the state where the company is incorporated, indemnification of directors and officers may be mandatory. In any case, indemnification only comes into play if this customer has named you personally as a defendant in the lawsuit. If the customer has done so, and you were acting in good faith within your role as a director or officer, the company should pay all your expenses in defending yourself, and any judgment against you if you lose. Of course, you should be hiring an attorney to defend the company (and you, if you are named) in this lawsuit. It's not a good DIY project.

Read 1 attorney answer>

Small Business

C Corp

North Carolina

Asked on Jul 16, 2023

C corp vs. S corp: Which is better?

I am currently starting a new business and am trying to decide which corporate structure is best for my particular situation. I have heard that C corps and S corps have different advantages and disadvantages, so I am looking to get legal advice as to which would be more beneficial for me. I understand that there are many factors to consider, such as taxation, liability, and potential for growth, so I am hoping to get a better understanding of the pros and cons of each structure and which would be the most suitable for my needs.

Nicholas M.

Answered Aug 1, 2023

It would be impossible to give you a primer on all of the advantages and disadvantages, but here is a headnote version: C-Corp Pros: Ultimate flexibility with regards to ownership, control, power, etc through the issuance of one or more classes of shares. Cons: Double taxed. You will be taxes as a corporation and as an individual taking a salary from the corporation. S-Corp (this is just a C-Corp electing to be taxed under subchapter S of the IRS code): Pros: Tax advantage for owners (up to 100 people) from not double taxing. Cons: Less flexibility than C-Corp but more granular control than LLC. Depending on the situation, most companies starting out are better off starting an LLC, which has less formalities, and then converting to a S-Corp or C-Corp once they scale and can take advantage. C-Corp, S-Corp, and LLC all have the same level of liability protection if you follow the formalities for formation and maintenance. C-Corps have the most rigor and LLCs have the least. You can also consider LLP and other business structures based on co-owners or other factors that a lawyer can help you evaluate.

Read 1 attorney answer>

Startup

C Corp

Ohio

Asked on May 22, 2023

C corp and equity dilution?

I am an entrepreneur who is in the process of forming a C Corp. I am looking to raise capital to fund my business and I am considering issuing equity to potential investors. I am concerned that issuing equity to investors could lead to dilution of my ownership, so I am looking for legal advice on the best way to structure my equity offerings to minimize dilution.

Paul S.

Answered Jun 23, 2023

If you want to avoid dilution, then you need to fund the business with your own resources, and pay all your workers with money rather than equity. Otherwise, when building a business, dilution is simply a reality you have to live with. You can start out with a large amount of ownership, for example, 80% of the authorized shares, but over time dilution is inevitable. Which would you rather have, 90% of a company worth $200,000, or 55% of a company worth $1 million?

Read 1 attorney answer>

Corporate

C Corp

New York

Asked on Jun 11, 2023

C corp and board composition?

I am a small business owner that is in the process of setting up a C Corporation. I am currently in the process of forming the board of directors and I want to make sure that I am following all of the necessary legal regulations. I want to ensure that I am properly setting up the board of directors and that the board is comprised of the correct individuals.

Michael S.

Answered Jun 21, 2023

The specific requirements for the composition of a board are a matter of State law, so the answer would depend on where your corporation is incorporated and, in some circumstances, where it is physically located. The number of directors and the specific choice of whom to add to the Board is generally best determined on a case by case basis.

Read 1 attorney answer>
See more legal questions…

Need to form a C Corporation?

Create a free project posting
Business lawyers by top cities
See All Business Lawyers
C Corp lawyers by city
See All C Corp Lawyers

ContractsCounsel User

Recent Project:
Switching the domicile of the companies from CA to FL
Location: California
Turnaround: A week
Service: Prepare & File
Doc Type: C-Corp Formation
Number of Bids: 5
Bid Range: $350 - $3,000
User Feedback:
She is very easy to work with. Always on top of the action items and get back to the client's needs immediately. Will continue to work with her.

ContractsCounsel User

Recent Project:
Ember Dissolution
Location: California
Turnaround: Over a week
Service: Prepare & File
Doc Type: C-Corp Formation
Number of Bids: 3
Bid Range: $400 - $1,200
related contracts
See More Contracts
other helpful articles

Need to form a C Corporation?

Create a free project posting

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call

Find lawyers and attorneys by city