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. Double Taxation

    A taxation principle referring to income taxes that are paid ...
  2. Subchapter S (S Corporation)

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

    A legal entity that is separate and distinct from its owners. ...
  4. Incorporation

    The process of legally declaring a corporate entity as separate ...
  5. Sole Proprietorship

    The sole proprietor is an unincorporated business with one owner ...
  6. Peter Pan Syndrome

    A regulatory environment in which firms prefer to stay small ...
Related Articles
  1. Entrepreneurship

    Should You Incorporate Your Business?

    Find out how becoming a corporation can protect and further your finances.
  2. Options & Futures

    Whom Should Corporations Please?

    Companies balance the interests of owners, customers and employees. Find out who comes out on top.
  3. Mutual Funds & ETFs

    Corporate Takeover Defense: A Shareholder's Perspective

    Find out the strategies corporations use to protect themselves from unwanted acquisitions.
  4. Options & Futures

    Why are corporations so concerned about their stock price?

    When the share price of a company is high or increasing, generally corporations, or more specifically their management teams, are happy about it and there is good reason for it.First of all, ...
  5. Investing

    Can a corporation deduct dividend payments to shareholders before taxes are calculated?

    Corporations may not legally deduct the dividend payments before taxes but there is another approach - a corporate structure called an income trust. Income trusts allow a firm to deduct dividends, ...
  6. Economics

    Corporate Tax Inversion

    U.S. companies like Burger King use corporate tax inversion to take advantage of lower taxes abroad.
  7. Taxes

    What is Value-Added Tax (VAT) and who pays it?

    Learn about the definition of value-added tax, the necessary circumstances that require a business to pay it and when a business is exempt.
  8. Taxes

    What types of revenue are taxable?

    Learn about all the various types of taxable corporate revenue and how different revenues are designated and differentiated from one another.
  9. Taxes

    10 Sources Of Nontaxable Income

    Taxes are often a deterrent from investing and saving. These financial practices will bring you no tax grief.
  10. Retirement

    Discover Master Limited Partnerships

    These unique investments provide significant tax advantages.

You May Also Like

Hot Definitions
  1. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  2. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  3. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  4. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  5. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  6. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
Trading Center