A C corporation is a business structure that’s owned by shareholders. A common alternative to the S corp, small businesses usually don’t pick C corps as their first choice. This is because they’re generally more complicated, are subject to double taxation, and typically have high fees. However, for many companies, the C corp can be an appealing option because it allows people to take stock in exchange for an ownership stake.
If you provide more than small services for a C corp, you’re considered an employee. Therefore, you should receive reasonable compensation for your work, which is subject to payroll taxes. What is reasonable, you ask? The IRS has a bunch of rules it needs to follow, so chat with a tax advisor to ensure your compensation is in line with all federal requirements. Also remember your reasonable compensation must be paid before making non-wage distributions.Updated September 26, 2017