The Advantages of C Corporations
When you do your incorporation right, you will protect your future in several ways. The limited liability in corporations enables your business to get investors. You need to understand the different IRS codes, so that you can choose between a C and S corporation. There are some restrictions on the leadership of S corporations, and its taxation is on one level. The one level of tax makes the S corporation attractive to many. The C corporations has double taxation but does not have restrictions on its ownership. Businesses that sell products work best with C corporations, unlike businesses that have appreciating assets. It might not work on some companies due to the double taxation. One can, however, avoid the double tax in several ways. You can come up with ways that ensure that no benefits are left over. The paragraphs below will focus on the advantages of the C corporation, and you can read on to learn more.
C corporations do not limit the number of shareholders that it can have. Many publicly traded corporations are C corporations because it allows the business to go public. If you need your business to go public, you should make it a C corporation because it does not have any restrictions on ownership. The number of shareholders for S corporations is limited, but a C corporation does not limit the number of shareholders that it can have.
With a C corporation, the directors can reside anywhere in the world. Foreigners can be part of your business. With this, the C corporation can work with foreigners, allowing investors from across the world to invest in your business. Your business can grow without limits. The existence of this corporation is also perpetual.
The types of shareholders in a C corporation vary. You can choose to have different voting rights for different shareholders. It’s also possible for this corporation to be owned by another corporation.
The IRS also allows the C corporations to have a wide range of deductions and expenses. A C corporation can create several employee benefits and deduct theses expenses. S corporations and LLCs do not enjoy this benefit because if you own more than 2% of the entity, you will pay taxes on any benefits received. In spite of the double taxation, in C corporations, your business can enjoy the tax-deductible business expenses. You also need to come up with ways of avoiding any profit left over so that you do not have any profits left for double taxation. The benefits can be used for wages and benefit plans. The type of corporation that you will select largely depends on how you want o to be taxed. The article above has discussed several benefits of C corporation, and you can keep them in mind so that you can make the right decisions.