Should I create a C corporation?

If you are starting a business in Kentucky, you are likely weighing the options for the various types of corporations you can create. While there are plenty of choices, the most popular one across the country is a C corporation, according to Incorporate.com. This is due to many factors that may make it a beneficial option for many companies.

First is the difference in terms of corporate ownership. While an S corp is limited to 100 shareholders, a C corp gives business owners the ability to divide shares between as many holders as needed. There are also no restrictions when it comes to who can become a shareholder. Partnerships, trusts, LLCs and other C corps are allowed to be shareholders. If you believe that the future of your business will lead to more than 100 shareholders who could be of various types, you may want to consider a C corp.

Also, a C corp has perpetual existence. The owner can leave the company and the C corp can still remain intact. There may also be less liability to the shareholders, employees, directors and officers when a C corp is used in the business model.

Another factor are taxes. C corps are subject to double taxation first at the company level and then as shareholder dividends. Shareholders are also restricted from deducting losses on their personal tax returns. For many business owners, the advantages of the C corp may outweigh any disadvantages that may accompany it but it is important to consider all of the various entities and always consult with your attorney and tax advisor. This information is meant to inform business owners about the benefits of C corporations and should not be taken as legal advice. 

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