What are the pros and cons of forming a "C corporation"?
A "C" corporation is the "default corporation." Whenever you file or organize a corporation in any state in the United States, it is automatically classified as a "C" corporation for IRS and tax purposes. Some of the benefits for any corporation, whether it's a "C" corporation or not stand true. The liability of a C corporation's owners is limited to the amount that they have invested. So, if you invested a certain amount in and the C corporation is sued, only the amount that's inside the C corporation could be affected or drawn upon in the proportions of the ownership. Additionally, C corporations have abilities just like another person. C corporations can hire employees, they can do almost everything another person can do, with some added benefits of allowing for better tax planning. With "C" corporations, you can even retain earnings at the corporate level to grow your business or to help entice investors or to make strategic partnerships or to purchase other companies, so you can do things with a C corporation that you can't do with other types of corporation, or even with sole proprietorships. Some of the cons of a C corporation, are that it's a little expensive. A lot of times your C Corporation could require, the help of an attorney or a legal document preparations site online, or going and researching online could be time consuming. I think the upkeep of a C corporation can be a hassle for some people. There are formalities and things that have to be taken care of by the directors and the officers of the C corporation. Additionally, you have to file a separate tax return for the C Corporation. A lot of individuals are perfectly comfortable filing their own taxes, but often filing a business tax return can be a little bit daunting for the average person. And the overall time and energy expended running a C corporation can be a little more difficult, so you should always take a look at whether the pros outweigh the cons for each individual case.
