Business Entity Types

Introduction to Corporations: US Tax Treatment and Business Entity Overview

8:10Premium Video

Written byLipai WangFounder · IRS-registered tax professional

Key Takeaways

Corporations provide the strongest liability protection
C corps face double taxation at 21% corporate rate
Most flexibility for growth and raising capital
More administrative requirements than LLCs

U.S. Corporations Overview

A corporation is a separate legal entity providing the strongest liability protection. It can enter contracts, own property, and sue or be sued independently of shareholders.

Corporate Taxation

C corporations pay tax at the corporate level (21% federal) and shareholders pay tax again on dividends (double taxation). Corporations have tools to manage this through salary payments and retained earnings.

Growth Flexibility

Corporations offer the most flexibility: multiple stock classes, institutional investors, IPOs, stock options. This comes with more administrative requirements — meetings, minutes, board governance.

Frequently Asked Questions

Can a foreign national form a C corp?

Yes. Unlike S corporations, C corporations have no restrictions on shareholder nationality.

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