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C Corporation (C Corp)

What is a C corporation?

Generally speaking, if you’re going to be raising venture capital, your investors will expect to invest in a Delaware C corp.

One property of C corps is that, unlike S corps and LLCs, they are not pass-through entities. This means the corporation pays taxes on its profits rather than passing on the profits to shareholders — which investors might not like. 

The arrangement also means you could be subject to double-taxation — the corporation pays income taxes on its profits, and then you pay income taxes on the same money if you receive dividends. But it’s not necessarily a big concern for startups that often reinvest their profits rather than paying them out to shareholders. 

C corps also have fewer restrictions for raising capital than other types of business entities. For example, unlike S corps, they can have different classes of stock, over 100 shareholders, foreign shareholders, and accept investments from other companies (such as VC funds). 

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