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What is a C Corporation?

What is a C Corporation?

Posted by  on 03 September, 2015   5 minute read

Incorporating your business helps you with legal protection and by forming a C corporation, business owners are considered separate to the entity and have limited liability up to the amount they invest in the corporation.

"A C corporation can consist of one person, anybody over the age of majority. There is no restriction," says Cliff Ennico, an attorney and nationally syndicated small business columnist and author of Small Business Survival Guide (Adams Media 2005). "The law recognizes that you can form a corporation for the sole purpose of limiting your personal liability for business debts, agreements and lawsuits, and, as long as you follow the rules regarding corporations, it should be there to protect you."

A C corporation’s profits are taxed twice, once when earned and second when profits are distributed as dividends to the owners. However, the advantage of a C corporation is that profits can be reinvested at a lower corporation tax rate.

Another benefit of setting up a C corporation is you may consider deducting fringe benefits from your taxes as business expenses (some of the common fringe benefits include insurance cover, retirement plan contributions, education assistance).

Tax return deadline - September 15, 2015

  • If you requested for an extension this is the final deadline to file corporate tax returns for the year 2014.
  • Corporations with a fiscal year ending June 30 must file their corporation tax by September 15.