A C corporation, or known simply as a corporation, is a business structure in which ownership and management are separate entities. The most popular types of C corporations are public companies on stock exchange, but this structure can work for small and big businesses alike. Knowing if a C corporation is right for your business requires understanding the risks and benefits of going corporate.
“Piercing the Corporate Veil”
One of the main disadvantages to running a C corporation is a court’s ability to “pierce the corporate veil.” That means, should you own a business and your shareholder’s run into some fraudulent activity, courts may have the right to investigate and go after your personal assets. This is typically an issue for business owners who are in cahoots with their dishonest shareholders. Illegal mistakes that lead to “piercing the corporate veil” include purchasing a home through your business’ bank account. C corporation owners can also be troubled by “double taxation”, so it is important to understand your business’s needs.
Capital for the Gaining
C corporations offer more profitable business opportunities for owners and shareholders. Going with a C corporation allows for easily transferable stock, tax breaks, and liability protection for owners. The freedom to easily gain capital is what makes corporations so profitable. And because business owners are separate from management, C corporations can continue on even after the owner dies or leaves the company. Setting up a C Corporation will require more work than for an LLC or S Corporation, but the benefits could make for a successful business in the end. If you’re planning to go with the C corporation business structure, hiring a business lawyer will help make the process run smoothly.
Could your business gain from going corporate?
