C-Corporation

A C-Corporation (C-Corp) is a legal business structure taxed under Subchapter C of the Internal Revenue Code, where the corporation is a separate taxable entity that pays corporate income tax at the federal rate of 21% (established by the Tax Cuts and Jobs Act of 2017), and shareholders are taxed again on dividends at individual rates of 0–23.8% — creating the well-known double taxation structure. Despite double taxation, C-Corps remain the preferred entity structure for venture-backed startups because they can issue multiple classes of stock (common and preferred), have unlimited shareholders, include non-US investors, and qualify for the Qualified Small Business Stock (QSBS) exclusion under IRC Section 1202, which can exempt up to $10 million (or 10x the adjusted basis) of capital gains from federal tax upon sale of qualifying stock held for more than five years. C-Corps are also subject to estimated tax payments on a quarterly basis (April 15, June 15, September 15, December 15), with underpayment penalties calculated at the federal short-term rate plus 3 percentage points when quarterly payments fall short of safe harbor thresholds (100% of prior year tax or 110% for corporations with taxable income exceeding $1 million). State-level corporate income tax adds 0–11.5% depending on jurisdiction, and multi-state C-Corps must apportion income using state-specific formulas based on sales, payroll, and property factors. Delaware remains the dominant incorporation state for C-Corps due to its well-developed corporate law (Court of Chancery), predictable legal precedent, and flexible governance provisions — though businesses must also qualify to do business in their operational states. doola supports C-Corp formation, Delaware franchise tax compliance, quarterly estimated tax calculation, and ongoing corporate governance requirements.