What is a key feature of a C corporation?

A key feature of a C corporation is that it provides limited liability protection for its shareholders. This means that the personal assets of the shareholders are protected from the corporation's debts and liabilities. If the corporation faces lawsuits or financial difficulties, shareholders are only at risk of losing the amount they have invested in the company, rather than being personally liable for the corporation's obligations.

This limited liability structure is one of the main reasons individuals choose to form a C corporation, as it separates their personal financial liability from the business's risks. This incorporation form also allows for easier transfer of shares, which can facilitate investment and ownership changes without impacting the company's operations.

In contrast, a sole owner is characteristic of a sole proprietorship, which does not provide limited liability. Operational simplicity is more applicable to unincorporated entities, and direct profit rewards to owners align with pass-through entities like S corporations or partnerships, not C corporations, which are subject to double taxation.