What Is a C Corp? Pros, Cons, Requirements and How to Start One

A C corporation is a corporate structure that separates personal and business liability and allows unlimited investors.

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Updated Mar 2, 2026 · 2 min read

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Key takeaways

A C corporation is a business structure that offers limited liability protection and can have an unlimited number of shareholders.
C corps can be attractive to investors because they can issue multiple classes of stock, but they come with more paperwork and ongoing requirements.
C corps may face double taxation: the corporation pays tax on its income, and shareholders may also pay tax on dividends.

Structuring your business as a C corporation can create more options for long-term growth. C corps can issue stock, attract venture capital and scale more easily than many other business structures.

However, C corps often come with higher costs and more complexity. You may face double taxation — with profits taxed at the corporate level and again when distributed to shareholders — along with more extensive reporting, recordkeeping and compliance requirements.

What is a C corporation?

A C corporation is a business entity that provides limited liability. This means the company, not its shareholders or owners, is typically held legally responsible for the company’s debt and other obligations.

A C corp can have an unlimited number of investors. They can be individuals or entities, such as banks or investment groups. A C corporation can also issue different classes of stock, which can give shareholders different rights.. Virtually all public companies are C corps.

However, you’ll have to deal with double taxation. The corporation pays taxes on its taxable income. And when dividends are paid to shareholders, they may also pay taxes on those dividends, even though the earnings were already taxed at the corporate level.

Pros and cons of a C corporation

C corporations come with meaningful benefits — like easier fundraising and limited liability — but they also bring tradeoffs, including added complexity and the potential for double taxation.

Benefits of a C corporation

You can have an unlimited number of investors.	You can have as many investors as are willing to purchase a portion of your company. Shareholders can be businesses or individuals, foreign or domestic. You can offer different classes of stock. In comparison, S corps are limited to 100 shareholders with restrictions on who can own shares.
Investors often prefer C corps.	Some venture capitalists, and even some angel investors, are willing to invest in a company only if they can secure preferred shares of stock. If investors are for-profit businesses or not based in the United States, they can't invest in S corps, making a C corp more appealing. Being a C corp signals your company’s potential by showing that it is less constrained in access to capital. This becomes important if you plan to take your business public.
It can help lower healthcare costs.	As the owner of a C corp, you can deduct your health care insurance premiums from your taxes. Your business can fully deduct the amount on its corporate return.

Drawbacks of C corporation

You may face double taxation on profits.	If your C corp makes a profit, the IRS will tax it. If you and other investors take a dividend, those proceeds are taxed again on your personal tax return and theirs. The government essentially taxes the same earnings twice, unlike pass-through entities like an S corporation, which are generally taxed once at the owner level.
It can be more complex to set up and maintain.	Owning and running a corporation in a legally compliant way is not a do-it-yourself project. There are federal and state filing and tax requirements to be met and corporate formalities to be observed, such as holding annual shareholder meetings. To maintain your business as a C corporation, you’ll likely need a lawyer and an accountant, which adds to costs.

How to start a C corporation

1. Pick a name for the company

Name your corporation, then do a thorough search of public databases in the state of incorporation and in any state in which you plan to do business. The website of the secretary of state’s office (or state equivalent agency) is a good place to start.

2. Get an employer identification number (EIN)

The IRS requires all corporations to have an EIN.

3. Name officers, a board of directors and draft a set of bylaws

This is required at the state level from the corporation’s inception. For example, New York requires new corporations to hold an organization meeting to elect a board and enact bylaws.

4. Incorporate your business

Each state has its own forms, procedures and fees. For example, it costs $100 to file articles of incorporation in California and $125 in New York. The agency responsible for business entities may have a different name depending on the state. In California, you file with the secretary of state. In Delaware, the comparable office is the Division of Corporations.

» MORE: Learn how to choose between a C corporation and an S corporation

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