TL;DR - C corporations offer limited liability protection and have a standardized structure that is preferred by investors.
Helpfulness - 3
Tags - C Corporation, stockholder, fringe benefits,
- 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.
Follow up links:
- Blank check preferred stock, https://www.investopedia.com/terms/b/blankcheckpreferred.asp