get your C-corp
but what is a C-corp?
Getting your C-Corp is not hard. Question is, is a C-Corp the right structure for your business. Here are a few things to consider:
There are options in the C-Corp structure that aren’t available to LLCs or S-Corps.
For example, you can issue unlimited amounts of stock as well as take on unlimited shareholders.
Unlike other types of business structures, C-Corps can have unlimited amounts of shareholders. As well, you can take on foreign shareholders and owners.
It’s also perpetual — can exist beyond the life of its owners
In a C Corporation, owners are only liable for what they’ve invested into the company. Their personal assets remain separate.
This is on of the great draws of incorporating.
C-Corps are able to be turned into publicly-funded companies and placed on the stock market to sell shares and receive investment through that avenue.
Corporate Tax Rate
Many business owners choose to incorporate as the corporate federal income tax is lower than the personal income tax rate.
C-Corps are taxed at the entity level and its owners’ pay is also taxed: which is referred to as double-taxation.
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more about c-corps
Corporations are independent legal entities. Pretty cool, right?
Articles Of Incorporation (sounds pretty legit) must be filed in the state of your choice (often the one in which you are based out of) to form this legal entity.
You must choose a name, of course.
It’s always good (and recommended) to consult with an attorney.
The initial Board of Directors must be in this Articles.
Articles of Incorporation are actually public record. As such, don’t include any confidential information (ie: the password to your sister’s Netflix account — on that note, Password123 is not an effective password. An effective password would be something like: TheGingerBreadManCantCatchMe1234).
Because Corporations are separate legal entities, you must treat them good (at least as good as the mother-in-law you’re trying so hard to impress).
You must hold regularly scheduled meetings (don’t skip these like that old ‘Mr. and Mrs. Smith DVD that barely plays anymore. and who still has DVD players, anyway).
You will need to setup a separate bank account. You can’t be mixing personal and corporate funds, capiche? That’s a big no, no. In fact, make that a triple no, no, no.
You must also file a separate corporate tax return.
What does all of this mean?
That if you fail to follow the necessary formalities you may lose your corporate veil (it may be pierced), which is your liability protection.
You need to treat your corporations right, if you want them to treat you right. Understand?
C Corps and S Corps are required to issue stock to its shareholders.
Basic stock stuff.
That is one of the coolest features of C-Corps: STOCK OPTIONS.
You can even put your company on the stock market to be publicly traded.
Corporate shares have liquidity (which probably means something really cool, but you should talk to a lawyer about that sort of thing. Something to do with water beds, most likely).
And shares of the company can be transferred with ease (more easily) than other types of structures.
That’s it for now.
If you have more questions, consult your favorite local lawyer, or schedule a phone meeting with us.
Corporations can be traced back to the 1500s, and their creation is said to have helped humanity move on from the Dark Ages.
See, before corporations, business ventures had no protection. In other words, business men were risking their personal assets (and in many cases their lives) when they started businesses.
Take ship adventurers (pretty sure that’s not what they were called, but whatever) as an example. They would collect money from investors and say SHIPS AHOY but never C’est La Vie because they were personally liable to a massive extent.
If they travelled the seas and didn’t come back with enough money to pay back their investors, they would be thrown into debtor’s prison or hanged for their crime of failure.
This is a drastic consequence.
Eventually, certain European governments realized the stakes were too high for business ventures and they invented to MIGHTY CORPORATION to encourage entreprenuers and risk-takers to do just that: take risks and be awesome and not have to worry about being thrown in prison for their debts or being murdered.
So that’s nice.
At least, we think so.
It’s good for society writ-large to encourage the crazy ones among us (the ones who, for some reason, believe we can start a business: that we have something to offer the world) to take the risk, shoulder the burden, and maybe even achieve something (create a valuable product or service) that benefits all of us.
Board of Directors Meetings
You must have regulard Board of Directors meetings to keep within the requirements of what it means to be a C-Corp.
You must have one shareholder meeting a year.
You must keep minutes of your meetings. This is crucial. If you don’t do this, your corporate veil may be pierced.