What can these C corporation advantages mean to your business
A firm is distinct from Its owners
Once formed, a firm has a life of its own, with its rights, capabilities, responsibilities, and liabilities. This means that a corporation can sue (or be sued) in its name. It can buy, own, and use its own real or personal property, make its contracts and guarantees, lend money, and invest funds.
A corporation offers owners limited liability protection –
Because a corporation is a separate entity, its debts, obligations, and liabilities are it’s own. Those who do business with a corporation must look to the company to satisfy any obligations owed to them, and not to the shareholders. The shareholders’ exposure to loss is limited to the amount invested in the corporation.
How C Corporations Work
Corporations pay corporate taxes on earnings before distributing the remaining amounts to the shareholders in the form of dividends. Individual shareholders are then subject to personal income taxes on the dividends they receive. Although double taxation is an unfavorable outcome, the ability to reinvest profits in the company at a lower corporate tax rate is an advantage.
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