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 HOME >> Forms of Business: C-Corporation |
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Starting A Small Business: Forms of Business
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TUTORIAL:
STARTING A SMALL BUSINESS 1.
Permits and Licenses |
A C-corporation is also referred to as a standard corporation. All those companies listed on the stock exchange are C-corporations.
Advantages of a C-corporation:
- Capital: By having it listed on the stock exchange, you invite people to invest in your company. Sell 1000 shares at $100 each and you have $ 100 000 to work with.
- Limited liability: With a C-corporation, you and your company are now two separate entities in the eyes of the law. Company debt is not personal debt. If the company is sued, you're not sued in a personal capacity.
Sounds great right? Hold on. The BIG disadvantage is:
- With a C-company you'll pay double tax. Yes. I said double tax! First you pay corporate tax on your company profits. What's left is used for salaries, including your own (you're an employee of the shareholders). Then you pay tax on that salary.
This isn't too bad if you're big, but smaller companies are hit hard by double tax. That's why the S-corporation was introduced.
PANDECTA SIDEBAR
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TUTORIAL:
STARTING A SMALL BUSINESS 1.
Permits and Licenses |
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