When forming your client’s new business, you are presented with several options: C-Corp, S-Corp, LLC, Sole Proprietorship… So which one is best for your client? While we have no doubt that you are familiar with the various business structures, we’ve laid out the pros and cons for forming your client’s business as a C-Corp in a very handy list.

A C-Corporation is a separate legal entity that can shield owners from personal liability and company debt. The C-Corp can enter into contracts, sue and be sued completely separate from owners. The Shareholders own the stock of the corporation and elect the Board of Directors, who appoint the Officers.

PROS of Forming a C-Corp Include:

  • Easy to raise money via the sale of stock
    • Attractive to investors because:
      • C-Corps can have an unlimited number of shareholders, can have different classes of stock, and do not need to be dissolved if a shareholder leaves
      • C-Corps can offer incentive stock option plans that allow employees to defer tax on the equity compensation until they sell the underlying stock
        • Easy to attract talent without offering a high salary
  • Can transfer ownership via the transfer of stock
  • Taxed at a lower rate than LLC and S-Corp
  • Provides personal liability protection

CONS of Forming a C-Corp Include:

  • Corporate formalities (i.e. annual shareholder meeting, where minutes must be kept)
  • Maintenance of corporate bylaws
  • Earnings are generally taxed twice: once at the corporate level on the C-Corp’s taxable income and a second time at the shareholder level on dividends or distributions
  • Management and tax issues are more complicated than S-Corp or LLC
  • Must have a separate corporate bank account

Attorneys Corporation Services, Inc., can help you incorporate your client’s business quickly, easily, and affordably. We can prepare and forward on the same day your proposed articles of incorporation for filing by using our economical and fast Draft ‘n File® corporate filing service*. All documents are filed in 24 hours.

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