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As a business owner, you must consider what’s best for you and your business. Sometimes, creating a financial and legal separation between you and your business is the best option.
If you are considering this, creating a C Corp may be right for you. Before moving forward, it’s a good idea to learn more about this business structure and what potential benefits it offers.
The legal definition of a C corporation is a separate entity that can sue or be sued. However, the definition of a C Corp from a tax standpoint is unique. These are considered separate taxpayers and must pay a corporate tax rate that is different from what applies to individuals.
While most C corporations are larger businesses with more than 100 shareholders and that are publicly traded, there’s no rule that a sole proprietor or small business cannot use this business structure.
Several benefits are offered by choosing a C corporation for your business structure. These include:
There are also tax considerations. Along with shareholder-employees obtaining fringe benefits that are tax-free, C corporations can also accumulate earnings to expand at lower tax costs than other business structures.
It’s important to consider if a C corporation structure is right for you and your business. It’s smart to get to know your legal rights and options to avoid making a mistake when choosing a business structure. Working with experts can also be beneficial.