C Corporation

A C corporation is treated as a separate taxable entity for federal income-tax purposes.  C corporation earnings are subject to tax at the corporate level as well as the shareholder level once the earnings are distributed.  Thus, C corporation income is generally subject to double taxation.  The double tax is an important factor to take into consideration when deciding whether to operate a business as a C corporation.

Liability Protection: Properly forming and maintaining a corporation will provide personal liability protection to the owners or shareholders of the corporation for any debt or liability incurred by the business. Personal liability of the shareholders is normally limited to the amount of money invested in the corporation.

Tax Advantages: Another important benefit is that a corporation can be structured many ways to provide substantial tax savings. You can minimize self-employment taxes and increase the number of allowable deductions lowering the taxes you pay on the income of the business. Many corporations structure retirement and tax deferred savings plans for their owners and employees which can provide even greater tax savings.