A C corporation differs from a sole proprietorship in that the C corporation:
Explanation
A C corporation exists apart from its shareholders, files its own Form 1120 and pays tax on its profits, and the shareholders are taxed again on dividends; a sole proprietorship has no separate existence and reports on the owner's Form 1040. The corporation still needs the licence bond under B&P §7071.6, and a corporate licence also needs a qualifying individual. It withholds and pays payroll taxes on its employees like any employer. And a corporation can and routinely does hold a contractor licence under B&P §7065.
Law Reference: Corp. Code §200; Bus. & Prof. Code §7065This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →
Practice all 1632 questions free — no signup required.
Own the complete CSLB Law & Business guide — PDF + EPUB, $24.99 →
Related questions on this topic
- Which of the following BEST reduces a contractor's need for outside financing on a project?
- A contractor's estimate omitted the 9% sales tax on $20,000 of materials. How much profit will this error erase if he cannot pass it on?
- A contractor's business is organized as an S corporation. A key financial feature of an S corp is that:
- A contractor's bid includes $30,000 labor, $25,000 materials, $15,000 subs, and a 20% markup on the total direct cost. What is the bid price?
- A contractor's fixed monthly overhead is $12,000. In a slow month he completes work generating only $9,000 of contribution margin. His result for the month is:
- A quick way to see if a business can pay its short-term bills is to check its:
Last reviewed: · editorial process