Tax Status Selection Analysis

Tax Status Selection
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Tax Status Selection
A C corporation refers to the legal entity that safeguards owners’ assets from creditors. The organization can have one or unlimited owners and can have numerous classes of stock. An entrepreneur can choose to have a C corporation instead of one of the flow-through entity types for different reasons. First, a C corporation has publicly traded shares. Second, it can take equity investors and seek venture capital (Donohoe, Lisowsky, & Mayberry, 2018). Third, a sole proprietor or small business can become a C corporation and enjoy privileges given to such types of organizations. Fourth, owners’ assets cannot be used to pay the firm’s debts. Fifth, an entrepreneur might consider having a C corporation to enjoy the limited liability of the owners and ease of share transferability.
A C corporation is better than other flow-through entities when it comes to the characteristics of the formation, business activity, and distributions. Owners enjoy limited protection when it comes to business liabilities or debts. A corporate structure is developed to oversee the achievement of corporate objectives to ensure that daily operations occur smoothly. A C corporation can have an unlimited num...