corporation (C corp)

business

Also known as: company

Written byThe Editors of Encyclopaedia Britannica,Nancy Ashburn

Fact-checked byThe Editors of Encyclopaedia Britannica

Updated: Oct. 1, 2026

Corporate board room with an executive giving a presentation on a digital interactive whiteboard showing charts and graphs.

Shareholders and management: sharing the company vision.

Also Known As:: company

A corporation is a legal form of business organization, chartered by a state, that exists as a separate entity from its owners. In the United States, the default corporate form is the C corporation (C corp), named for the subchapter of the Internal Revenue Code that governs its taxation.

Part of a bigger picture

A corporation is just one of the many business structures available. Learn how sole proprietorships, partnerships, LLCs, and others compare in Britannica Money’s guide to business structure types.

Defining features of a corporation

Corporations are distinguished from sole proprietorships and partnerships by several characteristics that make them especially suited for large-scale economic activity:

Limited liability. Shareholders are not personally liable for the corporation’s debts beyond their investments.
Transferability of shares. Ownership rights can be sold or transferred without dissolving the corporation.
Juridical personality. The corporation can enter contracts, own property, sue, and be sued in its own name.
Indefinite duration. The corporation can continue beyond the involvement or lifetime of its founders.

Corporate formation and ownership

Corporations are formed under state law by filing articles of incorporation. Shareholders purchase stock, which represents ownership and a claim on future earnings. A board of directors, elected by shareholders, appoints officers to manage day-to-day operations. Ownership changes—such as selling shares—do not affect the corporation’s legal existence.

Governance in a C corp

Shareholders elect a board of directors to oversee major decisions and set policy. The board appoints officers, such as a CEO or CFO, to run daily operations. This separation of ownership and management allows corporations to scale, but also brings heavier regulation and oversight than other business structures.

Corporate tax treatment

C corps pay corporate income tax on profits. If dividends are distributed to shareholders, those payments are taxed again at the individual level—a situation known as “double taxation.”

Historical development of the corporate structure

The modern corporation evolved from a blend of the joint-stock company (essentially a large partnership) and the traditional legal corporation used for medieval guilds and municipalities.

Joint‑stock companies were essentially partnerships that raised capital by selling shares to investors, enabling large-scale ventures while limiting individual liability. One early example is the Virginia Company (1606).
Medieval corporations came in the form of guilds, municipalities, universities, and monasteries—legal entities that existed separately from any particular member.

Partnership vs. corporation

Corporations are separate legal entities with limited liability for all owners and (in most cases) perpetual existence. Partnerships are legally tied to their owners, with liability and longevity depending on the partners themselves.

In 16th-century England, business corporations emerged as crown-chartered monopolies—like the East India Company in 1600—melding joint-stock capital-raising with corporate legal identity under mercantilist motives.

In the 19th century, general incorporation laws in the United States and Europe made it easier to form corporations without a special legislative charter. U.S. states competed to offer favorable incorporation laws, helping fuel rapid adoption. Large capital-intensive projects—especially railroads—depended on the corporate form, which in turn supported massive industrial expansion in steel, coal, and other sectors.

The rise of powerful corporations like Standard Oil led to public concern over monopoly power, prompting antitrust measures in the early 20th century. Over time, management of large corporations shifted from shareholders to professional executives, raising ongoing debates over corporate governance and social responsibility.

The role of the modern corporation

Corporations—ranging from small private firms to multinational giants—dominate manufacturing, energy, and services in most developed economies. The C corp structure remains a cornerstone for businesses seeking significant outside investment, access to public capital markets, and perpetual existence.

This article was most recently revised and updated by The Editors of Encyclopaedia BritannicaThis article was most recently revised and updated by Nancy Ashburn