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The Corporation > C-Corporations - Pg. 19

First Steps 19 difference is one of taxation; an S-corporation passes its profits (and losses) through to its share- holders, escaping the double taxation. Of course, as the IRS giveth, it also taketh away; S-corpo- ration status is accompanied by some onerous restrictions that must be carefully weighed against the tax boon. C-Corporations C-corporations are most appropriate if your company: · Is widely held (more than 75 shareholders). Other business entities limit ownership to 75 or fewer entities. · Wants to offer inexpensive options to attract employees. C-corporations can issue different classes of stock with different privileges and prices, making it possible for employees to pay less for shares than outside investors. · Plans to raise money from corporations or investment funds. Some business entities restrict ownership to natural persons, and others carry tax burdens for certain kinds of investors. · Expects owner/investor turnover. Transferring ownership is simplest in a corporation, more complex in a partnership. · Employs shareholders as salaried employees or service providers. Investor-employees can avoid the double-tax by taking profits as (reasonable) salary, which is deductible from corporate income. Ownership and Restrictions The C-corporation has almost no restrictions on who or what entities may own the business. The corporation is considered a separate legal being and may be owned by any number of shareholders, including only one. Foreign parties and other business entities may own the C-corporation. Because