What is a C-Corporation?
C-Corporations are legal separate entities created by the state which are separate and apart from its owners. The most significant attribute of the C-Corporation is its ability to shield its owners from personal liability. Shareholders are not liable for the debts of the business. If the C-Corporation is managed correctly, the C-Corporation is responsible for its own debts.
The C-Corporation has a perpetual life, meaning it continues forever. Even if one of the shareholders dies, retires, or chooses to leave the business, the corporation will remain in existence. Because of the advantages just mentioned the C-Corporation is the choice for many individuals forming a business with a partner. With all of the benefits listed above, why isn't the corporation the perfect business entity for all individuals? Because of the federal governments tax laws. A C-Corporation must pay double taxes on dividends. First, as income to the C-Corporation and then as dividend income to the owner or shareholder.