Why a C-Corporation Is Great for a Small Business

What is a C-corporation, and why is it great for a small business? A C-corporation, or C-corp, separates your business from your personal finances and assets. It’s the same legal structure used by Fortune 500 companies, allowing owners to seek various funding solutions while sheltering them from liability. Let’s look at a few reasons why incorporating as a C-corp could be the perfect choice for your business.

Protection From Liability

When you register your business as a C-corporation, you create it as an entirely separate legal entity from yourself. If your business falls on hard times, your personal assets won’t enter the equation.

In addition, you will not be held personally liable if somebody sues your business. Your company is an entity of its own, and while you are responsible for it, you will not be in trouble as an individual if your business is sued.

Plenty of Funding Options

Incorporating as a C-corp also allows you to choose from a wide variety of startup business funding solutions. Venture capital firms generally don’t like to invest in companies that are not C-corps. And if you want to register your business on a national exchange one day, a C-corp is mandatory for that purpose.

In addition, if you plan to fund your business with your existing 401(k) account, you’ll only be able to complete that rollover if your business is a C-corp.

Grow Your Business Easily

Because a C-corporation is a discrete legal entity, it’s relatively easy to add employees or subcontractors to your company. C-corps are attractive places for employees to work as you can offer them the opportunity for a 401(k).

Pro Tip:

It’s also fairly affordable to offer healthcare plans to your employees under a C-corp because you can deduct healthcare costs from your business’s taxes.

While C-corporations are not the perfect option for every business owner, they bring a variety of powerful advantages to the table. C-corporations are great for many small businesses as they operate independently of the owner and shield them from potential liability.

Looking for innovative ways to fund your unique business? Head over to Pango Financial’s funding solutions tool for more information about how to start your business on the right foot.