Who Can Be a Shareholder in a C-Corporation?

There are many advantages to structuring your business as a C-Corporation. These benefits include virtually unlimited growth potential through the sale of stocks, perpetual existence even through changes in ownership and shareholders, limited liability imposed on owners, tax breaks and no cap on the number of shareholders allowed to purchase stock.

This last point is important, as it empowers the company to sell shares to a vast amount of investors, creating the potential for robust funding. And should the need for financing or expansion arise, the organization can sell shares to meet it. Additionally, C-Corporations are owned by shareholders who elect a board of directors to make major decisions and oversee policies. They hold quite a bit of power and can have an enormous impact on the success or failure of a company. As a rising number of influential and savvy shareholders take the helm of a C-Corporation, the odds stack in its favor.

The Basics

Under subchapter C of the Internal Revenue Code, profits generated by a C-Corporation are taxed independently of its owners – a distinction that gives this type of organization its name and one of the main ways in which it differs from an S-Corporation.

The owner, or majority shareholder, of a C-Corporation can issue varying classes of stocks. This option creates a larger pool of investors, as they can choose the class that appeals to their business interests. As a result, the company opens itself up to investors who prefer common stocks as well as those who lean toward preferred stocks.

Shareholder Criteria

It is not necessary for C-Corporation shareholders to be United States citizens or permanent residents. In fact, the IRS imposes no restrictions whatsoever on the type of individual or entity that can purchase stock in a C-Corporation.

If you have decided that a C-Corporation is the right fit for you, start the filing process today using GovDocFiling. Our support team will help make your experience positive and easy.

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