C-Corporation

A C-corp is a type of business entity that is formed under the Subchapter C of the U.S. Internal Revenue Code (IRC). Unlike LLCs, which are usually taxed as partnerships, a C-corp offers particular tax advantages and can be taxed either as a regular corporation or a pass-through entity.

All profits generated by the C-corp are passed to its shareholders and taxes are paid at the individual level. This means that income from a C-Corp is treated differently from other sources when it comes to taxation.

Since it is a legal business entity, the owners and shareholders of a C-Corp also have limited liability protection for any debts incurred by the company. In some cases, forming an S-corp may provide more tax advantages than registering as a C-Corp, so it's important to consider all options before making any decisions.

What are the benefits of a C-Corp?

There are several benefits of forming a C-corporation (C-corp):

Limited liability protection: Shareholders of a C-corp are typically not personally liable for the company's debts and other liabilities.

Ability to raise capital: C-corps have the ability to raise capital through the sale of stock, which can help fund growth and expansion.

Perpetual existence: C-corps can exist indefinitely, regardless of changes in ownership or management.

Tax deductions: C-corps can take advantage of a wide range of tax-deductible expenses, such as salaries, bonuses, employee benefits, and business-related expenses.

Corporate structure: A C-corp allows for a more formal corporate structure, which may appeal to investors and stakeholders.

Attractiveness to investors: C-corps offer more investment opportunities for investors who expect equity in the company, as well as board seats and voting rights.

It's important to note that forming a C-corp involves certain requirements and formalities, such as holding shareholder meetings, issuing stock certificates, and keeping corporate records. Additionally, C-corps are subject to double taxation, where the corporation's profits are taxed at the corporate level and again as individual income when distributed to shareholders as dividends. It's always recommended to consult with an attorney or tax professional to determine if a C-corp is the best option for your business.

How do I start a C-Corp?

To start a C-Corporation (C-Corp), follow these steps:

• Choose a unique name for your corporation and check its availability in your state.
• File Articles of Incorporation with your state's Secretary of State.
• Obtain any necessary business licenses and permits.
• Develop bylaws for your corporation and hold an organizational meeting with your board of directors.
• Issue stock certificates to all shareholders.
• Obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
• Register to do business in any other states where you plan to conduct business.
• Open a bank account and set up a bookkeeping system to keep track of your business's finances.
• Obtain any necessary insurance policies, such as liability insurance, workers' compensation insurance, or property insurance.
• File for any additional permits or licenses required by your state or local government.

It's highly recommended to consult with an attorney or accountant to ensure you are accurately completing specific requirements for your state and the IRS.