What Is a C Corporation?

TL;DR - C corporations offer limited liability protection and have a standardized structure that is preferred by investors.

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Tags - C Corporation, stockholder, fringe benefits,

Questions answered:

  • What is a C corporation?
  • Why are C corporations preferable for investors?


  • C corporations offer limited liability protection to Directors and shareholders.
  • Fringe benefits can be deducted as business expenses (70% of eligible employees must be able to take advantage of the benefits).
  • Double taxation: company pays taxes on its profits and shareholders pay taxes on dividends.
  • Ownership of C corporations is represented by shares of stock.
  • C corporations must have a class of common stock (each share represents one vote at stockholder meetings)
  • Differently than as a sole proprietor/member of LLC, employees are not considered self-employed.
  • Delaware C corporations accounted for 89% of new IPOs in 2014.
  • When raising capital, C corporations often issue a customizable class of stock known as “Delaware Blank Check Preferred Stock.”
  • C-corporations have three tiers: shareholders, directors, and officers (run day-to-day operations).
  • Corporate formalities that must be abided by include shareholder and Director meetings, filing annual reports, and paying annual fees.

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