What are Some C Corporation Benefits

Introduction

If you’ve been mulling over the decision to incorporate your business, you may be wondering what exactly a C corporation is. What are some benefits of incorporating as a C corporation? Will it help or hurt my business? Those are important questions to ask before making any decisions about how your company will be structured or whether you’ll need the services of an accountant. In this post, we’ll go over some pros and cons of incorporating as a C corporation—and hopefully give you a better idea of whether this type of business entity is right for you!

Tax Benefits

Tax benefits are not the only reason to choose a C corporation. The personal liability protection and ability to pass on assets to your heirs can be important factors in making this decision. However, if you’re considering forming a corporation, it pays to remember that there are disadvantages as well.

A C Corporation is subject to double taxation: when the corporation earns money, it must pay taxes on its profits; then when those profits are distributed as dividends or distributions, they’re taxed again at the shareholder level! This means that shareholders receive less money than they would if they were owners in an S Corporation or partnership (where only one layer of taxation exists).

Easier to sell

For investors, the ease of transferring ownership is a great benefit. C corporations are more liquid and flexible than S corporations. The ability to transfer shares can be beneficial for both owners and shareholders if the company is being sold or taken public.

Perpetual Existence

One of the key benefits of a C corporation is that it can exist indefinitely. As long as there are shareholders who hold stock in your company, and you keep filing necessary tax forms and other paperwork with the government, your business will continue to exist. This makes it an attractive entity to use when transferring wealth across generations—the children or grandchildren of a founder can inherit shares in their company at any time. Additionally, if they don’t want them anymore, they can sell those shares on an open market just like any other stockholder would do.

Raise Capital

The main benefit of a C corporation is that it typically makes it easier to raise capital. Investors are more willing to back a business with a C corporation than one without, so if you’re looking for funding from outside investors then this may be important.

A second related benefit is that it also makes the process of raising debt easier. It is not uncommon for businesses to take out loans in order to finance growth or investment opportunities; again, being able to do so can make things much simpler and more efficient.

Large Number of Shareholders

A larger number of shareholders makes it easier to share the profits with a large number of people. This can be helpful if you want to give your employees or customers some money, since it means there will be more people to share that money with.

As well as helping out with the day-to-day running of the company, having more shareholders can also mean that there are more people who can help with decision making and marketing.

Conclusion

C corporations are a great choice for businesses that want to raise a lot of capital, or have more than one shareholder. C corporations have some major advantages over other corporate structures; they are perpetual, which means they can exist indefinitely without having to be reincorporated every few years. They’re also easier to sell and liquidate, so if you ever want to retire from your business or sell it off in its entirety, there will be no problems doing so with this type of corporation.