A C Corporation is the default corporation form as well as one of the most common corporation types in the United States. It's referred to as a C Corporation because the IRS code taxes this type of corporation under subchapter C rather than subchapter S. It's known as a legal person as far as the government and the law are concerned. When the corporation is fully authorized, this means that it can function as a separate entity from the people who created it, own it, and control it. While agents and shareholders, as well as directors, will always manage the actions of the corporation, the C Corporation can live on even if all the original founders or shareholders die or stop participating in the business.

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The C Corporation itself is governed by a number of laws. Federal law always applies, as do the business laws of the state where  it's incorporated. It doesn't matter if the state of incorporation is not the state where the business is physically located—the business can be incorporated in any state, even if it’s not the state where the business actually conducts business.

C Corporations have some of the highest tax rates of all the business forms because of what’s known as double taxation: The corporation itself pays taxes as a legal entity, and the shareholders and directors must then pay taxes on the salaries they receive from the entity as well. While this can result in significantly higher tax payments, the benefit is that C Corporations receive some of the broadest protections under the law. All of the owners and shareholders have only limited liability. This means that if the corporation goes bankrupt, creditors cannot sue them for their personal assets to satisfy the business debts. Additionally, the owners and shareholders can't be sued as individuals for the corporation's actions unless strict standards are met. All of this makes it easier for businesses to take risks and become profitable companies.

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Get Started Start your C-Corp Answer a few questions. We'll take care of the rest.

Get Started Start your C-Corp Answer a few questions. We'll take care of the rest.