Forming a C corporation is a good decision for some businesses because of the unique advantages that this particular business structure offers, but it is not right for every business. It’s well worth the time and money to hire a Fort Lauderdale business formation attorney for quick advice on the best business structure for your particular needs.
In this article we will go over some of the benefits of this business structure and why you might consider it. For more specific advice on your business, contact Mark Schecter at (954) 779-7009 for a consultation.
A C corporation offers more liability protection
Launching your business as a C corporation means that it will function as a separate entity from the shareholders and owners. This results in limited liability for the debts of the company, and the owners of a C corporation are also not required to use their personal assets in order to pay for the company’s liabilities.
The liability for the shareholders of a C corporation is limited to their personal investment in the company. This can be beneficial for several businesses, and it is one of the main reasons why a company might be structured as a C corp.
C corporations are subject to double taxation
The company’s taxable income is determined by taking deductions for business expenses and salaries. The tax return for a C corporation must be filed with the IRS, and the company can then distribute dividends to shareholders after taxes are paid on the company’s profits.
The shareholders of a C corporation are required to claim these dividends on their tax return, which is how double taxation occurs. Double taxation can be avoided, however, by leaving the profits in the business and not distributing them as dividends.
C corporations can issue stock and there are formalities required
C corporations can issue stock to new investors in order to raise money. There are specific formalities required as well including adopting bylaws, maintaining shareholder records, recording and holding meetings with the board of directors and shareholders, and filing all required state and federal reports.
It is important for the principals of a C corporation to follow these formalities because a court may find that the business was not operated as a corporation which can result in the loss of limited liability protection for the owners.
This is only a brief list of some of the most important features of a C corporation. Mark Schecter at Schecter Law is a knowledgeable Fort Lauderdale business formation attorney who can explain more of the benefits and disadvantages of a C corporation in the state of Florida and answer any questions that you may have about it.
For a consultation, contact Schecter Law today by calling (954) 779-7009.