For the complete documentation index, see llms.txt
For the complete documentation index, see llms.txt
What to know about electing to be taxed as a C corporation (double taxation)
A C-Corporation pays tax on its profits, and shareholders may also pay tax when those profits are distributed as dividends. This is called double taxation. The impact depends on your business and the shareholders' tax circumstances.
## Federal tax and dividends
The corporation pays U.S. federal corporate income tax on its profits at a flat 21% rate. Shareholders pay tax on dividends distributed to them. For foreign shareholders, dividend withholding is commonly 30%, unless a tax treaty between the U.S. and their home country reduces that rate.
Your corporation may also owe state corporate income tax, depending on where it's registered and does business. Because this structure taxes the same profit twice, it's worth discussing with a tax professional whether a C-Corp election fits your goals, particularly if you plan to raise venture capital or eventually distribute profits as dividends.