A C Corporation brings your business greater credibility and growth potential. It differs from S Corporations and LLCs in taxation, ownership, and the ability to raise capital through stock.
Frequently Asked Questions About C Corporations
What is a C Corporation?
A C Corporation (also known as a “C Corp”) is a legal entity that protects the owners’ personal assets from creditors. It can have an unlimited number of owners and multiple classes of stock. Unlike an S Corporation or an LLC, it pays taxes at the corporate level.
What steps must I take to form a C Corporation?
You must file Articles of Incorporation with the state where you’re based and designate a Registered Agent to receive official and legal documents on behalf of your business. You must also obtain an employer ID number (EIN), which is often required for tax purposes and business banking.
Can I change my corporation status or convert to an LLC in the future?
Yes, you can convert an S Corporation to a C Corporation or an LLC should your business needs change. The decision to convert must be approved by the shareholders. Conversion planning depends on your company’s specific circumstance, so be sure to discuss your plans with a legal professional.
What compliance rules must I follow as a C Corporation owner?
C Corporations need to have shareholders, directors, and officers. They must hold director and shareholder meetings, keep corporate minutes, and allow shareholders to vote on major corporate decisions. Your C Corporation also needs to file annual reports and maintain good standing in state(s) where you’re incorporated.
Talk to a Specialist
Have a specific question about a product? A CT Specialist will follow up with a custom quote along with a comprehensive assessment of your needs.
- Work with you to select the incorporation package that best suits your needs and ambitions
- Answer your questions about C Corporations, S Corporations, LLCs, and everything in between to ensure you incorporate the right way
- Outline relevant compliance rules and processes so you know just what to expect
- Advise on your state’s naming requirements and perform a name check to verify availability
- File your Articles of Incorporation with the state, including all required language, monitoring the process, and promptly delivering upon approval
Because they can issue multiple classes of stock and have an unlimited number of owners, C Corporations are ideal for attracting venture capital and other types of equity financing - like crowdfunding. Their well-established governance rules provide peace of mind for investors, lenders, and creditors, and they can structure payroll to reduce taxes.