C Corporation

A corporation is an artificial legal entity (technically, a juristic person) which, while made up of a number of natural persons or other legal entities, has a separate legal identity from them. 

Legal benefits

• Protection of personal assets. Safeguarding personal assets against the claims of creditors and lawsuits. Sole proprietors and general partners in a partnership are personally and jointly responsible for all the liabilities of a business such as loans, accounts payable, and legal judgments. In a corporation, however, stockholders, directors and officers typically are not liable for their company's debts and obligations. They are limited in liability to the amount they have invested in the corporation (eg: If $100 in stock was purchased, no more than $100 can be lost). Corporations may also hold personal assets like houses, cars or boats. If one is personally involved in a lawsuit or bankruptcy, these assets may be protected. A creditor of the owner of a corporation cannot seize the assets of the company; however, they can seize their ownership shares in the corporation, as that is considered a personal asset.

• Transferable ownership. Ownership in a corporation  is easily transferable to others, either in whole or in part. Some states' laws are particularly attractive to this end. 

• Retirement funds. Retirement funds and qualified retirement plans may be set up more easily with a corporation. Corporations can also fully deduct the cost of paying its owner's health insurance.

• Taxation. In the United States, corporations are taxed at a lower rate than individuals. Also, they can own shares in other corporations and receive corporate dividends 80% tax-free. There are no limits on the amount of losses a corporation may carry forward to subsequent tax years. A sole proprietorship, on the other hand, cannot claim a capital loss greater than $3,000 unless the owner has offsetting capital gains.

• Raising funds through sale of stock. Capital from investors can be raised for corporations easily through the sale of stock.

• Durability. A corporation is capable of continuing indefinitely. Its existence is not affected by the death of shareholders, directors, or officers of the corporation.
• Credit rating. Regardless of an owner's personal credit scores, corporations acquire their own credit rating, and build a separate credit history by applying for and using corporate credit.

What is the definition of a subchapter S corporation?

As defined by Subchapter S of the tax code of Internal Revenue Service (IRS), an S corporation is a business entity that has elected to pass its corporate income, losses, credits and deductions to its shareholders to include on their tax forms