You will hear about both C Corporations and S Corporations. Both are corporations with charters granted by the state of organization. You can organize in Nevada for the best asset protection laws, for example, and qualify to do business in California. In that case, you will have one corporation paying annual fees in two states (which many people do). While we like and often use S Corporations, we keenly appreciate the advantages of C Corporations. They certainly have their merit and a place in your entity structure strategy.
The C and the S refer to IRS Code Sections. C corps feature a double taxation – one tax at the company level and another tax on profits distributed to shareholders. This double tax is why many people consider S corps, which has only one level of tax. But there are restrictions on ownership of S corps, where as there are no such limits on C corps.
Here is a quick list of C Corporation advantages:
They can have an unlimited amount of shareholders, from anywhere in the world.
For Nevada and Wyoming corporations, officers and directors can reside anywhere in the world. This can be a boon for foreign investors. (Learn more about foreign investing.)
They can have several different classes of shares.
They have the widest range of deductions and expenses allowed by the IRS. (more on this below)
They are the most widely recognized business entity in the world, and are the premier entity for going public. In Nevada and Wyoming, nominee (or stand-in) officers and directors can be utilized, adding extra levels of privacy.
