A "C" corporation uses a corporate structure that is taxed directly, rather than passing income through to its owners for taxation purposes. This tax structure is useful, in that the maximum corporate tax rate is substantially less than the tax rate charged to high-income individuals. Since less cash is paid to the government, a C corporation has more cash available for other purposes, such as reinvesting profits in the business. Also, since it has a corporate structure, its owners do not incur any liabilities taken on by the corporation. Another benefit is that a C corporation can survive its owners, persisting as new owners take the place of the old ones. Yet another advantage is that the entity can issue a variety of types of stock, such as several classes of preferred stock, which allows it to raise money more easily than other legal forms of business.
The single largest complaint about the C corporation is the concept of double taxation. In essence, the corporation is taxed on its earnings, while its shareholders are taxed again when they receive dividends from the corporation.
A C corporation is formed by registering with the secretary of state's office for the applicable state, and issuing stock certificates to its owners. The shareholders then elect a board of directors, which governs the entity in their stead. The board hires a management team, which runs the business for them. The corporate secretary is also responsible for filing an annual report with the secretary of state's office for as long as the entity remains in business.