{"id":4370,"date":"2023-09-06T18:38:59","date_gmt":"2023-09-06T18:38:59","guid":{"rendered":"https:\/\/moneymakersandsavers.com\/?p=4370"},"modified":"2023-09-06T18:39:06","modified_gmt":"2023-09-06T18:39:06","slug":"what-is-a-c-corp-and-pros-and-cons","status":"publish","type":"post","link":"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/","title":{"rendered":"What Is A C-Corp and What Are Its Pros and Cons?"},"content":{"rendered":"\n<p><\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_55 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-660ee86a0bca2\"><span class=\"\"><span style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #4ff74c;color:#4ff74c\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #4ff74c;color:#4ff74c\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-660ee86a0bca2\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#Understanding_C-Corporations_Pros_and_Cons\" title=\"Understanding C-Corporations: Pros and Cons\">Understanding C-Corporations: Pros and Cons<\/a><ul class='ez-toc-list-level-2'><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#What_is_a_C-Corporation\" title=\"What is a C-Corporation?\">What is a C-Corporation?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#Pros_of_a_C-Corporation\" title=\"Pros of a C-Corporation\">Pros of a C-Corporation<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#1_Limited_Liability\" title=\"1. Limited Liability\">1. Limited Liability<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#2_Access_to_Capital\" title=\"2. Access to Capital\">2. Access to Capital<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#3_Ownership_Transferability\" title=\"3. Ownership Transferability\">3. Ownership Transferability<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#4_Employee_Benefits\" title=\"4. Employee Benefits\">4. Employee Benefits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#5_Perpetual_Existence\" title=\"5. Perpetual Existence\">5. Perpetual Existence<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#Cons_of_a_C-Corporation\" title=\"Cons of a C-Corporation\">Cons of a C-Corporation<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#1_Double_Taxation\" title=\"1. Double Taxation\">1. Double Taxation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#2_Regulatory_Burden\" title=\"2. Regulatory Burden\">2. Regulatory Burden<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#3_Complexity_and_Costs\" title=\"3. Complexity and Costs\">3. Complexity and Costs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#4_Less_Control_for_Shareholders\" title=\"4. Less Control for Shareholders\">4. Less Control for Shareholders<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#5_Reduced_Business_Loss_Benefits\" title=\"5. Reduced Business Loss Benefits\">5. Reduced Business Loss Benefits<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#Key_Differences_between_C-Corps_and_S-Corps\" title=\"Key Differences between C-Corps and S-Corps\">Key Differences between C-Corps and S-Corps<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#1_Taxation\" title=\"1. Taxation\">1. Taxation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#2_Ownership_Rules\" title=\"2. Ownership Rules\">2. Ownership Rules<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#3_Shareholder_Requirements\" title=\"3. Shareholder Requirements\">3. Shareholder Requirements<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#4_Employee_Benefits-2\" title=\"4. Employee Benefits\">4. Employee Benefits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#5_Ease_of_Transferability\" title=\"5. Ease of Transferability\">5. Ease of Transferability<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/moneymakersandsavers.com\/what-is-a-c-corp-and-pros-and-cons\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Understanding_C-Corporations_Pros_and_Cons\"><\/span>Understanding C-Corporations: Pros and Cons<span class=\"ez-toc-section-end\"><\/span><\/h1>\n\n\n\n<p>C-Corporations, commonly referred to as C-Corps, are one of the most prevalent types of corporate structures in the United States. Though they are prevalent, understanding the advantages and disadvantages of forming a C-Corp is crucial before deciding to go down this path. In this blog post, we&#8217;ll take an in-depth look at the pros and cons of C-Corporations to help you make an informed decision.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_a_C-Corporation\"><\/span>What is a C-Corporation?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A C-Corporation is a separate legal entity distinct from its owners, known as shareholders. C-Corps are governed by a board of directors and are subject to various federal and state regulations. The &#8220;C&#8221; stands for the subchapter of the Internal Revenue Code under which they are taxed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Pros_of_a_C-Corporation\"><\/span>Pros of a C-Corporation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Limited_Liability\"><\/span>1. Limited Liability<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>One of the most significant advantages of a C-Corp is that it offers limited liability protection to its shareholders. This means that shareholders are generally not personally responsible for the debts and obligations of the business.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Access_to_Capital\"><\/span>2. Access to Capital<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>C-Corporations have the ability to issue multiple classes of stock, which makes it easier to raise capital by selling shares. This is particularly beneficial for companies looking to expand or invest in new opportunities.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_Ownership_Transferability\"><\/span>3. Ownership Transferability<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The stock of a C-Corp is highly transferable, making it easier to buy and sell ownership interests. This is especially beneficial for companies with multiple owners or those planning an eventual sale or public offering.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_Employee_Benefits\"><\/span>4. Employee Benefits<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>C-Corps can offer a wider array of fringe benefits that are tax-deductible for the corporation and tax-free for the employees. These can include health benefits, retirement plans, and stock option plans.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"5_Perpetual_Existence\"><\/span>5. Perpetual Existence<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>C-Corporations can continue to exist independently of their founders, which is valuable for long-term planning and succession strategies.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Cons_of_a_C-Corporation\"><\/span>Cons of a C-Corporation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Double_Taxation\"><\/span>1. Double Taxation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>One of the most significant drawbacks of a C-Corp is the issue of double taxation. Profits are taxed at the corporate level, and then any dividends distributed to shareholders are taxed again at the individual level.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Regulatory_Burden\"><\/span>2. Regulatory Burden<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>C-Corps face a considerable amount of regulation and are required to follow strict formalities. This includes holding regular board meetings, maintaining corporate records, and filing extensive paperwork.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_Complexity_and_Costs\"><\/span>3. Complexity and Costs<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Establishing and maintaining a C-Corp can be complex and expensive. Initial setup costs, annual filing fees, and the costs associated with ongoing compliance can add up.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_Less_Control_for_Shareholders\"><\/span>4. Less Control for Shareholders<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In a C-Corp, the board of directors generally makes all significant business decisions. While shareholders can vote on critical issues, they usually have less control over the day-to-day operations compared to other structures like sole proprietorships or partnerships.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"5_Reduced_Business_Loss_Benefits\"><\/span>5. Reduced Business Loss Benefits<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In a C-Corp, business losses cannot be passed through to shareholders to offset other income, which can be a disadvantage in the early stages of a business when losses are more common.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>An S-Corporation is similar to a C-Corporation in that it offers limited liability protection to its shareholders. However, taxation for S-Corps flows through to individual shareholders, similar to a partnership or sole proprietorship, thus avoiding the double taxation that C-Corps face.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Differences_between_C-Corps_and_S-Corps\"><\/span>Key Differences between C-Corps and S-Corps<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Taxation\"><\/span>1. Taxation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>C-Corp<\/strong>: Subject to double taxation. Profits are taxed at the corporate level, and dividends are taxed again at the individual level.<\/p>\n\n\n\n<p><strong>S-Corp<\/strong>: Pass-through taxation allows profits and losses to be reported on individual shareholders\u2019 tax returns, avoiding double taxation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Ownership_Rules\"><\/span>2. Ownership Rules<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>C-Corp<\/strong>: Can have an unlimited number of shareholders and can issue multiple classes of stock.<\/p>\n\n\n\n<p><strong>S-Corp<\/strong>: Limited to 100 shareholders and can only issue one class of stock.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_Shareholder_Requirements\"><\/span>3. Shareholder Requirements<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>C-Corp<\/strong>: No restrictions on the type of shareholders.<\/p>\n\n\n\n<p><strong>S-Corp<\/strong>: Shareholders must be U.S. citizens or residents, and cannot be other corporations or partnerships.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_Employee_Benefits-2\"><\/span>4. Employee Benefits<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>C-Corp<\/strong>: Offers a wide range of tax-free fringe benefits.<\/p>\n\n\n\n<p><strong>S-Corp<\/strong>: Less flexibility in offering tax-free benefits, especially to shareholder-employees who own more than 2% of the stock.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"5_Ease_of_Transferability\"><\/span>5. Ease of Transferability<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>C-Corp<\/strong>: Easy transferability of shares without affecting the corporate structure.<\/p>\n\n\n\n<p><strong>S-Corp<\/strong>: Any change in ownership could potentially jeopardize the S-Corp status, subject to certain IRS rules and restrictions.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>C-Corporations offer numerous advantages, such as limited liability, easier access to capital, and a wide range of fringe benefits for employees. However, they also come with downsides like double taxation, greater regulatory burdens, and less control for shareholders. It&#8217;s essential to weigh these pros and cons carefully before deciding if a C-Corp is the right structure for your business.<\/p>\n\n\n\n<p>By understanding these aspects thoroughly, you can make an informed decision that aligns with your business goals, risk tolerance, and long-term strategies.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Understanding C-Corporations: Pros and Cons C-Corporations, commonly referred to as C-Corps, are one of the most prevalent types of corporate structures in the United States. Though they are prevalent, understanding the advantages and disadvantages of forming a C-Corp is crucial before deciding to go down this path. In this blog post, we&#8217;ll take an in-depth&#8230;<\/p>\n","protected":false},"author":159998696,"featured_media":4419,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_kadence_starter_templates_imported_post":false,"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"footnotes":""},"categories":[1420,1530],"tags":[1417,1664,1544],"_links":{"self":[{"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/posts\/4370"}],"collection":[{"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/users\/159998696"}],"replies":[{"embeddable":true,"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/comments?post=4370"}],"version-history":[{"count":3,"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/posts\/4370\/revisions"}],"predecessor-version":[{"id":4420,"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/posts\/4370\/revisions\/4420"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/media\/4419"}],"wp:attachment":[{"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/media?parent=4370"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/categories?post=4370"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/tags?post=4370"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}