Texas Legal Entities
C Corporations
C corporations are different from S corporations. The biggest difference, from a business perspective, is that C corporations are taxed by the Federal government. The reason why many business people form C corporations is because it is much easier to get approved if the company has fewer shareholders or fewer resources.
In essence a C corporation has three distinct characteristics which define it:
- C corporations must have a board of directors, as well as a group of shareholders. These two groups must be independent to reduce corruption.
- C corporations usually have a much more complicated hierarchy and structure than a L.L.C. (Limited Liability company). This is often a chief reason for becoming a corporation.
- C corporations are taxed by the Federal government, but do not count as a personal tax for the owners of the C corporation.
Although these corporations are taxed, there are many benefits in forming a C corporation. For one, these types of corporation offer more flexibility in what kinds of stocks they can offer to their shareholders and the general public. There is also no limit to the number of shareholders that can help finance the company, offering an advantage to grow well beyond the company's starting level. C corporations also hold the benefit of being able to deduct many expenses and employee benefits as business expenses and not subject to being taxed.
Contact a Business Formation Expert
For more information about forming a C Corporation in Texas, contact the experts of Texas Legal Entities. Visit www.texaslegalentities.com today.
At any time, please feel free to ask us a question. It's FREE!