Glossary

C Corporation

A corporation that has been elected to be taxed as an entity separate from its shareholders in accordance with Subchapter C of the Internal Revenue Code.

See Also

S Corporation.

Tips

A C Corporation pays its own taxes, in addition to taxes paid by the shareholders. The primary disadvantage to a C Corporation is “double taxation” — the profits are first taxed at the corporate level and then taxed again at the shareholder level when they are distributed to shareholders. A C Corporation differs from an S Corporation because an S Corporation is a pass-through entity, which means the corporation itself does not pay taxes. Rather, the taxes are passed through to the owners or shareholders of the corporation.

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