What is a C corporation?

Let us first discuss about the difference between corporation and a C corporation. C Corporation is registered at state level. It is a type of company which is incorporated without limitations on the number of shareholders or whether those shareholders are foreign or domestic.  A C Corporation also has a number of tax benefits.

Following are C Corporation advantages:

The ability to Split Profits

C corporations have the ability to divide the profits between the corporations and owners. In this way amount of income to be claimed on the corporation’s tax filings while increasing the amount of money reported on the owners’ taxes.

Less chances of Audit

Another C Corporation advantage is that they do not face income and losses like S corporations due to which there is a lower potential for audits than they would have with an S corporation.

Low Taxation rate in the initial year

C corporations are taxed at a lower rate than other corporation types for the first $75,000 that they make.

They enjoy greater financial control

C corporations are allowed to use fiscal years for their accounting provided that they are not a personal service corporation. Fiscal years are split between two calendar years in this way C Corporations can delay some of the tax inducing declarations.

Fringe Benefits

Fringe benefits offered by the C Corporation may be tax deductible, if the shareholder who receives them is also an employee.

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