How Do the Benefits of C-Corps Make Business Easier
John F. Dennehy Jr., CPA, PC

Benefits of C-Corps

How Do the Benefits of C-Corps Make Business Easier

The benefits of C-Corps are one of the primary reasons these types of business entities dominate American business. Simply put, there are far more C corporations than any other type of business in the U.S. While there are numerous reasons to explain their popularity, the main and most attractive benefits of a C-Corp include:

  • Limited liability
  • No limitations to the amount of stock that can be sold
  • Tax-deductible business expenses

Although the benefits and advantages of C-Corps are designed to make business easier, whether or not a C-Corp is best for you will depend on your goals. As a result, it’s vital for you to understand these benefits in depth and know how they can impact your business. Most importantly, you should understand how the advantages of a C-Corp compare with those of an S-Corp as well as an LLC. In the meantime, let’s take a closer look at three of the top benefits of C-Corps.

The Benefits of C-Corp Start with Limited Liability

Occasionally you will read of lawsuits brought against corporations by consumers, and these lawsuits can be of gargantuan proportions. The lawsuits against tobacco companies are good example of this. Without the benefits of limited liability, the owners of the business could be sued personally for missteps of their corporation. This could wind up being very expensive and even result in personal bankruptcy or devastation.

Limited liability prevents the individual members of the business from being held responsible for actions of the company. This means that owners, employees, and associates can make mistakes but avoid personal legal culpability. This is desirable for obvious reasons for business owners, but it is also a virtual necessity for employees.

If, for example, a store worker loading groceries into a customer's car was to drop a 50-pound turkey on the customer's foot, that employee could not be sued by the customer. The business might be liable for any potential damages, but the worker would be exempt. This benefit ensures that C-Corps are able to hire workers without having them pay for their own liability insurance.

To preserve this benefit, the owner must make sure not to mix personal finances or assets with business assets. If personal and business assets are combined enough, the limited liability will be rendered invalid.

The Advantages of C-Corporations Include No Stock Limitations

One way to exponentially increase the value of a business is to sell stock. Unlike other types of business entities such as S-Corps, C-Corps place no restrictions on the number of shareholders. If your business is seen as a good investment, these stock sales can produce essential capital to grow the company.

While the potential for business growth with this perk is clear, there are a few requirements regarding selling stock. For one, the company is required to conduct shareholder meetings to keep investors apprised of the financial health of the company.

It should also be noted the government "double taxes" c-corps by taxing both the company profits and the shareholder dividends. There are strategies to attempt to mitigate the effect of this, but a business owner needs to be careful when employing them.

C-Corp Advantages Include Tax-Deductible Business Expenses

One of the big advantages of a C-Corp is the ability to deduct a wide array of business expenses. This can greatly lessen the effect of some of the corporate taxes that a C-Corp will pay, and it provides a lot of flexibility for owners. Some of the C-Corp tax deductions allowed include:

  • Salaries and bonuses for shareholders who are designated as employees
  • Charitable donations
  • Medical premiums and fringe benefits

Most importantly, a professional tax accountant can work closely with your business and help you maximize your tax deductions.

Contact John F. Dennehy to Take Advantage of the Benefits of a C-Corp

The benefits of a C-Corp may be clear, but taking advantage of them requires business and accounting acumen. The professionals at John F. Dennehy CPA can advise and partner with you every step of the way. We offer a full range of flexible and scalable services to help you form, manage and grow your business. Our key services include:

Our ultimate goal is to remove the stress and headaches that come from attempting to navigate the sometimes Kafkaesque world of corporate finance. Our team can help you to maximize the advantages of a C-Corp while minimizing some of the disadvantages. We value the vision and dedication of the entrepreneurs we partner with and look forward to bringing our experience, knowledge, and guidance to your business. Let us help you turn your passion into the thriving business you have always dreamed of.

Contact John F. Dennehy CPA today to learn more about the key benefits and advantages of a C-Corp.

About the Author John F. Dennehy Jr., CPA, PC

We at John F. Dennehy CPA are a team of certified public accountants who service clients throughout Long Island. The services that we provide are comprehensive, and we can resolve multiple accounting needs for a client.

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