What is a C corporation in Canada
A C corporation, under United States federal income tax law, is any corporation that is taxed separately from its owners. A C corporation is distinguished from an S corporation, which generally is not taxed separately
types of Corporations in canada
Incorporating your business as a corporation creates a distinct legal entity, separating the business from its owners, who are known as shareholders. This separation provides limited liability protection. Under this structure, shareholders are typically not personally responsible for the corporation’s debts or legal responsibilities.
There are two main types of corporations in Canada: the closely-held private corporation (also known as the Canadian-controlled private corporation or CCPC) and the public corporation.
1- Closely-Held Private Corporation:
A CCPC, or Canadian-Controlled Private Corporation, is a type of corporation characterized by its private ownership, typically held by a limited group of shareholders, which often includes the company’s founders. CCPCs have access to certain tax advantages and benefits, such as the small business deduction and the lifetime capital gains exemption
2- Public Corporation:
Public corporations are businesses whose stock is available for purchase on stock exchanges, allowing the general public to own shares. These corporations typically have a broad base of shareholders and must adhere to more stringent regulatory standards compared to private companies.
Versus S corporations
Generally, all for-profit corporations are automatically classified as a C corporation unless the corporation elects the option to treat the corporation as a flow-through entity known as an S corporation. An S corporation is not subject to income tax; rather, its shareholders are subject to tax on their pro rata shares of income based on their shareholdings. To qualify to make the S corporation election, the corporation's shares must be held by residents, citizens or certain qualifying trusts. A corporation may qualify as a C corporation without regard to any limit on the number of shareholders, foreign or domestic.
If you are planning to Set up & Open a C corporation in Canada with the above description, contact me
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