C Corporation Definition
A corporation (C Corp) is an entity election made by a business that allows the shareholders or owners of a business to be treated as separate entities. Using this classification, the profits of the C corporation are taxed as they are earned, and the shareholders are taxed when the profit is distributed to them.
C Corporation Expanded Definition
While there are several legal entities you can choose from when operating a business, C corporation elections are most commonly made by large companies. This is due in part to the additional cost associated with establishing and operating this type of highly regulated business entity.
Because the shareholders are considered owners of a C Corp, their personal assets are usually protected from legal action. Unfortunately, double taxation applies, which means both the C Corp and the shareholders pay income tax.
Last Updated By
Christan Neff | Apr 17, 2023