C Corporation (C Corp)

A C Corp is a legal entity separate from its owners. Corporations can make a profit, be taxed, and be held legally liable. Unlike other business entities the income, losses, deductions, and credits are not passed-through to its shareholders. C Corp profits can be taxed twice – one time at the corporate level and then a second time when dividends are paid to shareholders. Wages are also paid to shareholders which get taxed as W-2 wages on the shareholders’ personal return. Many times, the main driver to become a C Corp is to scale the business more easily. The corporation has the advantage in the areas of raising capital, going public, or being sold.