The definition of a Corporation (C-Corporation) is an entity type recognized by the federal government and the IRS as a standalone entity that is taxed separately from its owners. In other words, the owners file their individual tax returns separately from the tax returns of the corporation. Corporations are ideal for businesses that will eventually need to raise money or bring in outside investors. Shares can be more easily assigned than other business types such as Limited Liability Companies or Sole Proprietorships.
There is often a lot of confusion around exactly what allows a company to be considered a corporation. When you form a corporation, you are inviting prospective individuals to be shareholders, exchanging money, property, and or a combination of those two things in favor of having stock in that corporation. When you are talking about tax purposes, a corporation will typically take the same types of deductions as you would see from a sole proprietorship.
There are also different forms of corporations that you are going to want to consider. You have the standard C Corporation, as well as the S Corporation. The difference between the two is largely for tax purposes and how they are viewed by the Internal Revenue Service. In addition, Corporations that have assets in excess of $10 million face certain electronic filing requirements in comparison to other companies. The profit you earn as a corporation is where you get taxed. Shareholders of the corporation cannot deduct any of the losses from it on their own tax return either. In a nutshell, corporations face unique tax circumstances and typically are led by an owner and supported by shareholders.
All Corporations (including C-Corps and S-Corps) are required to obtain a federal Tax ID Number in order to open a bank account for the corporation. This number can be obtained online using the secure online Corporation Tax ID Application and you can have your EIN to you within an hour.