Historically, the C-Corporation has been the most common form of doing business. Its benefits include limited liability for shareholders, an excellent structure for raising large amounts of capital, and the ability to take advantage of special tax deduction strategies in the area of fringe benefits, such as group life and health insurance, pension/profit-sharing plans and many others. The greatest drawback, however, is the risk of double-taxation.
Some of the most common C-Corps are associations, insurance companies, and business entities organized under a federal or state statute (if the statute describes or refers to the entity as incorporated or as a corporation, body corporate or body politic). Also, certain state-chartered business entities conducting banking activities, as well as many others.
Additionally, in order to maintain the ‘corporate veil’ and the benefits of asset protection, it is important to record annual minutes, utilizes separate checking and bookkeeping for the entity, and remembering to employ the corporate name on all legal documents and advertising materials. The C-corporation must file an annual tax return using IRS form 1120.