The standard corporation, also called a C Corporation, is the most common corporate structure. Companies must file certain documents with the state in order to become incorporated. The corporation is a separate legal entity that is owned by shareholders. The standard corporation is allowed to have an unlimited number of shareholders, who are typically protected from the debts and liabilities of the corporation. A shareholder's personal liability is typically limited only to the amount the shareholder invested in the company.
Corporations do experience double-taxation.
Corporations are considered a separate legal, taxable entity from the owners for income tax purposes. Therefore, corporations pay tax on their earnings. If corporate earnings are then distributed to shareholders in the form of dividends, dividend income is taxed as regular income to the shareholders. By distributing corporate income in the form of dividends, the corporation does not receive the reasonable business expense deduction. The ownership of the corporation is easily transferable through the sale of stock.