C Corporation

AAA

DEFINITION of 'C Corporation'

A legal structure that businesses can choose to organize themselves under in order to limit their owners' legal and financial liabilities. C corporations are legally considered separate entities from their owners. In a C corporation, income is taxed at the corporate level and is taxed again when it is distributed to owners.

INVESTOPEDIA EXPLAINS 'C Corporation'

C corporations are an alternative to S corporations, where profits pass through to owners and are only taxed at the individual level, and limited liability companies, which provide the legal protections of corporations but are taxed like sole proprietorships. While the double taxation of C corporations is a drawback, the ability to reinvest profits in the company at a lower corporate tax rate is an advantage. Most corporations are C corporations.

RELATED TERMS
  1. Corporation

    A legal entity that is separate and distinct from its owners. ...
  2. Subchapter S (S Corporation)

    A form of corporation that meets the IRS requirements to be taxed ...
  3. Sole Proprietorship

    The sole proprietor is an unincorporated business with one owner ...
  4. Double Taxation

    A taxation principle referring to income taxes that are paid ...
  5. Incorporation

    The process of legally declaring a corporate entity as separate ...
  6. Peter Pan Syndrome

    A regulatory environment in which firms prefer to stay small ...
Related Articles
  1. Should You Incorporate Your Business?
    Entrepreneurship

    Should You Incorporate Your Business?

  2. Whom Should Corporations Please?
    Options & Futures

    Whom Should Corporations Please?

  3. Corporate Takeover Defense: A Shareholder's ...
    Mutual Funds & ETFs

    Corporate Takeover Defense: A Shareholder's ...

  4. Can a corporation deduct dividend payments ...
    Investing

    Can a corporation deduct dividend payments ...

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center