c corporation - Phase 1 Discussion Board ACCT618-1001B-01 C...

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Phase 1 Discussion Board ACCT618-1001B-01 C corporations unlike partnerships and sole proprietorships are completely separate legal entities in that the company is legally independent from its owners. C corporations are often established in the state in which the company’s home office or headquarters is located. A C corporation is established with state authorities therefore it must abide by the corporate laws in the state in which it is incorporated (Incorporation, n.d.). Advantages of C corporations There are many advantages and disadvantages to consider when considering becoming a C corporation. The biggest and most attractive advantage of becoming a C corporation is the limited liability protection that this entity offers its owners. Owners of a C corporation only risk losing what they have invested in the company. With this being said the owners cannot be held liable for the losses or the debts of the company (Incorporation, n.d.). There are several tax benefits of becoming a C corporation. Creating a C corporation can actually lower the company’s tax rate dependent upon the amount of income the company generates. Fringe benefits offered to employees are tax deductible. As a corporation the company could offer more in terms of retirement, medical plans, and life insurance contribution limits than if the company was incorporated. Corporations are not subject to the limits and restrictions as their unincorporated counterparts in terms of carrying back or forward operating losses. A great example of this is that a sole proprietor would not be able to claim a capital loss that exceeds $3,000 unless the sole proprietor has offsetting capital gains (Incorporation, n.d.).
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This note was uploaded on 06/01/2010 for the course ACCT 618 taught by Professor Franklimmitchum during the Spring '10 term at Colorado Technical University.

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c corporation - Phase 1 Discussion Board ACCT618-1001B-01 C...

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