“C” Corporation Filing
Advantages of forming a C Corp
C Corps are the only type of organization that can "go public" and sell an unlimited number of shares. They do typically get taxed at a higher rate, as taxes are imposed at both a personal and corporate level. However, having access to more capital, higher revenue potential, and ultimately profits, often offsets this.
Why choose a C Corp?
PERSONAL ASSET PROTECTION
ABILITY TO RAISE CAPITAL
UNLIMITED OWNERS
OPTION TO SELL SHARES
What is a C corporation?
A C corp is what most people think of when they hear the word “corporation.” Most large companies are filed under this structure, as it offers the most asset protection and tax-related options for business owners. It is also typically the only choice for owners that would like to be taxed separately from their company.
Choosing the C corp structure isn’t the best choice for everyone. Filing as a C corp requires a great deal of paperwork, as well as formal processes that must be carefully and regularly filed. C corps are often also more closely monitored than other types of businesses, due to the fact that they are one of two types of corporations that can issue stock to the public.
C corporation Pros
Ability to take the company public and issue stock
More attractive structure for investors
Liability protection
A possible lower tax rate
C corporation Cons
Double taxation
Extra paperwork
Strict regulation
C Corporation FAQs:
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What are the primary advantages?
The C Corporation is the oldest and one of the most common business structures, and is typically what comes to mind when the average person hears the word "corporation". It provides the greatest level of separation and protection between the company and its owners, and allows the company to raise capital through the issuance of publicly traded stock.
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Are there any restrictions on who can file?
One of the greatest strengths of this structure is that it typically has no requirements regarding who can become part of its ownership. A few states do require that an individual be at least 18 years of age to officially become an owner.
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What are the tax implications?
C Corporations and their owners are taxed separately from one another, which results in "double taxation." This means that the corporation will be taxed on its profits and then each individual owner will be taxed again on the income distributed to them at a personal level. Filing as an S corp can help business owners avoid this, but will also open them up to paying self-employment taxes.
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Are there a required number of individuals needed to form a C Corporation?
Most states only require one director in order to start a C Corporation. However, some states impose a minimum number based on the number of shareholders the company has. This required number is typically never lower than three and has no maximum limit.
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What formal paperwork must be filed?
The application required for incorporating as a C Corporation is called the Articles of Incorporation (also referred to as a Certificate of Incorporation). This document contains basic information about the company, its owners, and its directors. Depending on your state of incorporation, there may also be state-level fees or taxes that must be paid. Free Your Mind Services can take care of the required filings for a C Corporation. This allows you to focus on development and growth of your new company.
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Is an attorney required during the filing process?
An attorney is typically not required when starting a business. A business filing service such as Free Your Mind Services can help to streamline the formation process, and save a great deal of time, effort, and money. However, if you are unsure of which business structure may be right for you, or you have questions regarding specific tax or organizational issues, it may be advisable to speak with an attorney or accountant.
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How should I name my C Corp?
Your company name must be unique and not deceptively similar to any other trademarked name or business. It is also required that your name not intentionally misrepresent the products or services you offer. For C Corps, most states require a signifier of your corporate status, such as “Company”, “Corporation”, “Incorporated”, or a relevant abbreviation to be added to your business name. Choosing a name for your C Corp is an important decision, so take time to research and select a name that will accurately represent you and your business.
If you would like Free Your Mind Services to check if your business name is available for use, we offer a free Name Availability Search. Just give us a call and we will begin this process for you.
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Do all C Corps need a Registered Agent?
All formal business entities are required to have a Registered Agent on file with the state at all times. The agent may be an individual or company with a physical address located in the state of incorporation. Agents must be available during standard business hours . The role of a Registered Agent is to receive any and all of communications from the government to the business. The agent’s name and address must be disclosed as part of the company’s public record.
Free Your Mind Services offers a professional Registered Agent service to go with your business filing services. We provide companies of all types and sizes an affordable solution that will ensure that they remain compliant with all Registered Agent requirements.
A few differences between “C” corp & “S” corp.
How it's taxed
S Corp: Once—only shareholders pay taxes on profits received.
C Corp: Twice—the business pays taxes at the corporate level, and shareholders pay taxes on income received.
How shares work
S Corp: Owners can only get common stock which comes with voting rights.
C Corp: Owners may get preferred stock—which comes with no voting rights but priority to dividends before common shareholders
How it's owned.
S Corp: Limited to 100 shareholders who must be U.S. citizens or residents.
C Corp: No limits on how many people and who can own shares.