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What is a C Corp?
A C Corp, also known as a general corporation, is the O.G. of legal business structures. They’re still a popular choice for companies raising venture capital and companies that want to trade their stock on public exchanges like the NYSE or NASDAQ.
How are C Corps taxed?
C Corps are taxed on their profits directly and must file corporate income tax returns. If the corporation’s net profits are distributed to shareholders (in payments called dividends), the shareholders will then pay taxes for that income on their personal returns as well. This corporate taxation is also known as “double” taxation.
What are the advantages of a C Corp?
- Limited liability protection
- Increased investment opportunities
- Unlimited growth potential
- No limit on number of shareholders
- Increased tax deductions
- Perpetual existence
- Easily transferrable ownership
- Ability to transfer stock on public exchange
- Option to retain earnings within the company to fund continued growth
What are the disadvantages of a C Corp?
There aren't a lot of them, but they're biggies...
- Double taxation
- Complex formal compliance requirements
How is a C Corp formed?
To create a C Corp, you’ll need to file articles of incorporation with your state, designate a registered agent, and pay the necessary filing fees. Depending on your state, you may also be required to file an initial report and/or publish a public notice of your corporation’s existence.
After registering your business, you must also obtain any business licenses and permits that may be required for your C Corp to legally conduct business. Those licensing requirements can vary greatly depending on location, industry type, number of employees, and more.
What are the name requirements for a C Corp?
Each state has its own specific naming requirements, but in general, you’ll need to choose a name that isn’t the same as (or deceptively similar to) a name already in use by another business on file with your state. You’ll also need to choose an ending for your business name that indicates it’s a corporation. Common choices include “Inc.,” “Corp.,” “Incorporated,” or "Corporation.”
What are a C Corp's owners called?
Shareholders—any person or entity that owns at least one share of stock in a corporation is considered a shareholder.
What are authorized shares of stock?
The maximum amount of shares a corporation is authorized to sell. Once a share of stock is sold, it becomes an issued share.
Corporations generally get to decide on the number of shares they wish to authorize, and must specify that amount in their articles of incorporation. Some states base their incorporation fees or corporate taxes on the number of authorized shares, so it may be best to choose a moderate amount to begin with. An amendment can be filed at any time if authorized shares ever need to be increased.
What is a share's par value?
The lowest amount for which a share of a corporation’s stock can be sold. A corporation sets its own par value when filing its articles of incorporation. Most corporations have no par value or one that is very low. The par value can be changed anytime by filing an amendment.
How are C Corps managed?
C Corps are operated by officers (president, secretary, etc.), and overseen by directors. The shareholders elect directors who set a vision for the company and administer corporate decisions and policies. The directors typically elect officers who carry out and manage day-to-day affairs. A sole person can act as shareholder, director, and all of the officers of a corporation.
What compliance formalities will I need to follow after incorporating?
Corporations have all sorts of fun requirements to keep them busy, such as: issue shares of stock to owners, record issued shares in the stock transfer ledger, adopt and maintain bylaws, hold and record minutes of initial meetings of directors and shareholders, hold and keep minutes of annual meetings, and more. All of these documents are typically kept in a compliance kit. In most states, corporations must also comply with annual report filing requirements.
What are bylaws?
Bylaws are the internal rules a corporation makes to dictate how it will be managed. Bylaws vary based on each corporation’s needs, but often include things like guidelines for the election of officers and directors, what their duties will be, when and where required shareholder meetings will be held, and how stock will be issued.
If they sound important, it’s because they are. They’re also a required part of corporate compliance, so you don’t want to get caught without them.
We take corporate compliance seriously, so the bylaws offered with our incorporation packages are customizable, allowing you to easily choose which provisions will best meet the needs of your corporation and its shareholders.
What are initial meeting minutes?
The required initial meeting of shareholders is where some of your corporation’s most important decisions ever will be made, so documenting them is a must. Topics include issuing stock, making resolutions, and reviewing and adopting the bylaws. Holding and taking minutes (notes) of this meeting are among your first corporate compliance requirements—that may sound scary, but never fear—our fully customizable minutes will get you started off on the right foot with your corporate compliance duties, guiding you through the various elements of the initial meeting and how to properly—and easily—document every important detail.
How do I get started setting up a C Corp?
You can get started right here, right now.