C Corporation
A separate taxpayer - profits taxed at the corporate level, then again as dividends.
What is C Corporation?
The corporation pays tax on its earnings (a flat 21% federal rate), and shareholders pay tax again on dividends received - double taxation. No limit on the number or type of shareholders, and it can issue multiple classes of stock. Shareholders' liability is limited.
C Corporation: a worked example
$100 of profit taxed at 21% leaves $79; paid out as a qualified dividend, the shareholder owes up to 20% more on it.
What is the difference between C Corporation and S Corporation?
C corp = taxed twice, unlimited shareholders. S corp = pass-through, 100 or fewer shareholders, one class of stock.
Often confused with S Corporation - see C Corporation vs S Corporation side by side.
More terms in Clients, Strategy & Tax
Sole Proprietorship
A business owned by one person with no legal separation from the owner.
General Partnership
Co-owners share management and unlimited liability; income passes through.
Limited Liability Company (LLC)
Limited liability for owners with pass-through taxation by default.
S Corporation
A corporation that passes income through to shareholders, avoiding double tax.
Trust & Estate Accounts
Accounts run by a fiduciary - a trustee or an executor - under a governing document.
Foundations & Charities
Tax-exempt organizations investing for a mission, often in perpetuity.
Client Profile & Data Gathering
The financial and nonfinancial facts every recommendation must rest on.
Investment Objectives
Preservation of capital, income, growth, growth and income, speculation.