Business FinancesQuestion 1216 of 1605
A C corporation differs from a sole proprietorship in that the C corporation:
a.Is a separate legal and taxable entity that files its own income tax return
b.Never needs a contractor's bond
c.Is exempt from payroll taxes
d.Cannot hold a contractor license
Explanation
A C corporation is a separate legal entity that files its own corporate income tax return (Form 1120) and pays tax on its profits; shareholders are then taxed on dividends. A sole proprietorship is not separate from its owner and reports on the owner's personal return.
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