Profits of C Corporation
A C Corporation can own property, enter into contracts, borrow money, and sue and be sued just like a person. In addition a C corporation must pay income tax on the profits at the corporate rate.
Any profits that are distributed to shareholders via dividends are then taxed again in the hands of the shareholders at their individual income tax rate. This amounts to double taxation, with the same profits taxed at both the corporate and personal level. In the real world, however small C corporations can easily avoid paying income tax by paying salaries and/or fringe benefits to its shareholders.
Operating Loss and Retained Earnings
Individual share holders can't claim operating losses of a C corporation business. Instead losses on the corporation's books in one year can be offset against future or past years corporate profits.
C corporation profits kept in the business are taxed at an initial tax rate of 21%. Retaining earnings at a lower tax cost is an advantage that growing small C corporations have over other entities.
Tax Reporting
C corporations must file annual federal tax returns regardless of whether they have any income or not. California corporations need to file state tax returns as well and need to pay a minimum annual franchise tax of $800 even if the corporation loses money.