Forming a C Corporation

In a brief presentation, Roy Oppenheim from Oppenheim Law described the key features and typical use cases of a C-corporation. He explained that a C-corp is often utilized when building a company with aspirations of potentially going public. The business model typically involves retaining profits within the company, rather than distributing them to shareholders, in order to fuel company growth. Although this approach incurs some taxation at the company level, it avoids the double taxation scenario that would occur if profits were distributed to shareholders who would then also owe taxes. This structure is particularly beneficial for businesses aiming for an eventual initial public offering (IPO) or sale to another company, at which point stakeholders could cash out their investments.

Hi, Roy Oppenheim for Oppenheim Law. A lot of times people ask me, what is the difference between a C-corp and an S-corp? And I want to talk a little bit about a C-corp here. A C-corp is typically used when you are building a company, and you expect to one day maybe even go public. And so, any profits that you have in the company, you will not necessarily be distributing to the investors, but you’ll be retaining those earnings, and those earnings will be used to build the company bigger and bigger, and of course, the company will have to pay some tax, but if you did a distribution, not only would the company be paying tax, but each shareholder would also be paying tax. So typically, you use a C-corp when you’re building a business, and you don’t want to make distributions to the shareholders, and you want the company to continue to build and grow because eventually, you’re either going to, as I mentioned, go public, or the alternative, sell the business to either another public company, or it could be a private company. And then, at that point, you would cash out. So, that’s what a C-corp is. And hopefully, that’s been helpful to you. Roy Oppenheim…