subject: Incorporation 101: What is C-Corporation? [print this page] Main Disadvantages of C-CorpMain Disadvantages of C-Corp.
C-Corporations have certain disadvantages. The main disadvantage is the fact that the profit of a C-Corporation is taxed to the corporation when earned, and the corporation does not get a tax deduction when it distributes dividends to shareholders. Then when dividends are distributed to the shareholders they are taxed again at the shareholder level. This phenomenon is called "double taxation".
Similarly, when C-Corporation has a loss, its shareholders cannot deduct it from their personal income.
C-Corp. vs. S-Corp. vs. LLC
Other forms of incorporation of business organization include S-Corporation and LLC. Each of those types of entities have certain advantages and disadvantages when compared to the common C-Corporation, but a more detailed comparison between those entities goes beyond the scope of this article.
