Is a C Corporation a Public Corporation?
A C-type corporation can be either public or private. When a business incorporates, its tax structure defaults to a C type, and ownership of the corporation is measured by how many shares an entity owns. An entity can be a person or another business, such as a mutual fund company, who or that invests in the company's stock.
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Corporation Tax Structures
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A corporation, by law, is a separate entity from its owners. The Internal Revenue Service (IRS) sets forth the rules and regulations pertaining to how corporations are taxed. A C-type corporation pays taxes on its profits minus losses. When the corporation's owners take profits, the owners are taxed again because they are considered employees and must pay income tax. An S-type corporation is a tax structure that an owner may elect. That type of corporation is not taxed on its profits; instead, the profits "pass through" the corporation, and the owner is taxed only on the income he is paid.
Private Corporations
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A privately held corporation is a business entity that is not publicly traded. Nevertheless, a corporation is a public entity and is governed by the laws and regulations under the state in which it was formed. Corporations must file annual reports with the state pertaining to management and financial affairs, and they must preserve on record the details and nature of such affairs by keeping minutes of all meetings held. All of this information is considered to be public.
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Publicly Traded Corporations
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A publicly traded corporation makes its stock available to buy and sell to anyone. To do so, a corporation must have its stock listed on one of the indexes, such as the New York Stock Exchange (NYSE) or the National Association of Securities Dealers Automated Quotation System (NASDAQ). Many small publicly traded corporations use an over-the-counter exchange, which is a less sophisticated forum where investors can buy or sell stock. Publicly traded corporations must adhere to a strict set of regulations and are monitored by the Securities and Exchange Commission, a federal agency charged with maintaining a fair and open marketplace.
Limited Liability
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Incorporating a business has many benefits. One feature many corporate owners enjoy is limited liability. Limited liability is important because if a corporation is found liable for harm or damage, its owners will not be held personally responsible for the harm or damage in connection with the business, provided the owners are not involved in any foul play.
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References
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