What is a C-Corp? So you might be asking, what is a C-Corp and how is it taxed? A C-Corporation is a legal structure of business in which the owners and shareholders are separate from the corporation. This means that the income made by the owner is taxed separately than the corporation. This type of corporation offers unlimited growth potential through the sale of stock; which can attract investors. There is no limit to the number of shareholders a C-Corp can have. Also, C-Corporations limit the liability of investment holders and firm owners. This is because the most they can lose is the amount of investment they put into the company if the business were to fail. How is a C-Corp taxed? C-Corps pay corporate income tax on earnings before they distribute their profits to the shareholders. Distributing their profits to shareholders is most commonly known as a dividend. As mentioned before, the taxation of the corporation is separate from the owners and shareholders. It is important to note though that the dividends handed out to the shareholders have to be claimed on their personal taxes. This is what is commonly known as double taxation. How does a C-Corp operate?