C Corporation

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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.

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